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Etsy (NASDAQ:ETSY) shares are moving lower in premarket Thursday after Jefferies analysts downgraded by two notches to Underperform from Buy.
The analysts also slashed the price target to $85 per share, signaling a downside risk of about 25%.
They believe that Etsy’s 70% premium to Internet “appears unsustainable given below average EBITDA growth (11% vs. 15%) and risk of downside to consensus.” The new price target translates to a 25% premium to Internet.
“Buyers are churning faster and spending less on ETSY, forcing marketing higher and putting pressure on EBITDA. With more limited take rate upside and deteriorating buyer trends, we see downside to consensus from slowing top line and moderating margin expansion,” the analysts wrote in a client note.
The analysts highlight that churn hit a record high at ETSY’s marketplace last year.
Etsy shares are down about 6.5% in premarket trading and 5.5% year-to-date (YTD) based on yesterday’s close.
