Brean Capital Initiates Buy on Etsy Inc, but Price Target Reflects 39% Downside for the Stock

In a research report issued today, Brean Capital analyst Tom Forte initiated coverage with a Buy rating on shares of Etsy Inc (NASDAQ:ETSY) with a $19 price target, which implies 19% upside above the company’s IPO price of $16. However, as the company’s shares are more than doubled in the first day of trading, Forte’s price target is now reflecting a potential downside of 39%.

A sign advertising the online seller Etsy Inc. is seen outside the Nasdaq market site in Times Square following Etsy's IPO in New York

Forte noted, “We give Etsy a score of 87 out of 100 for our investment framework of the six key areas necessary to be successful in the future of retail (social, international expansion, mobile, payments, logistics, and enabling technology). Etsy is poised to exploit the mobile e-commerce market opportunity, as mobile represented 53.2% of visits and 36.1% of GMS in 2014. Catalysts for the stock include mobile sales and seller services revenues. Our $19 target price is based on our DCF analysis that assumes the company is able to achieve a long-term adjusted EBITDA margin of 20.0% compared with 11.8% in 2014.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tom Forte has a total average return of 0.9% and a 45.5% success rate. Forte is ranked #2308 out of 3572 analysts.

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