This post was originally published on this site
Goldman Sachs analysts initiated research coverage on Etsy (NASDAQ:ETSY) and Wayfair (NYSE:W) today.
Etsy is initiated at Buy with a price target of $130 per share. Goldman Sachs believes that Etsy is “likely” to hit post-covid double-digit revenue growth in five years to 2027, as well as an adjusted EBITDA margin of over 30%.
“We forecast a 15% ’22-’27 revenue CAGR, mostly driven by GMS growth of 13%, as we believe Etsy will continue to execute against a vast & growing global eCommerce opportunity. We see solid new user acquisition & retention dynamics, along with GMS/buyer growth paired with product innovation as key forward GMS growth drivers,” the analysts said in a client note.
The greatest risk facing Etsy is the current consumer environment, they note.
On the other hand, Wayfair shares are started at Neutral amid near-term uncertainty. The price target is set at $36 per share.
Unlike Etsy, Goldman Sachs notes that Wayfair is “unlikely” to achieve adjusted EBITDA margin of at least 10%.
“We model Adj. EBITDA margins expanding to ~6% in 2027, as Wayfair continues reinvesting against forward growth,” the analysts wrote in a separate note.
The Neutral rating is also a result of the more “balanced risk-reward” in W shares, despite Goldman Sachs having a constructive stance on the company’s multi-year revenue growth potential,
“With shares down ~-80% YTD (vs. SPX YTD -23%), we think these headwinds (in addition to a potential deterioration in the broader macro/consumer environment) are largely understood & reflected at current valuation,” the analysts concluded.
Both shares of Etsy and Wayfair are up nearly 1% in pre-open Monday.
