Etsy (ETSY) broke out to a new high on accelerating revenue growth and a raised outlook for the rest of 2018, though shares gave up much of their gains Tuesday.
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After Monday's close, the company filed second-quarter earnings that helped the IBD Leaderboard stock blow past a flat-base buy point of 45.98. Etsy stock catapulted by more than 19% in morning trading, hitting an intraday high of 50.60.
But Etsy stock retreated sharply as the session wore on and closed at 43.84, up 3.3% on the stock market today.
Etsy is in a third-stage base, so a new breakout normally would have a smaller chance of making a big run. Yet, analysts were bullish on the latest results. Etsy received several stock-price increases from analysts Tuesday morning.
Etsy stock has more than doubled in price this year. The company held its initial public offering in April 2015, pricing Etsy stock at 16.
Online retailer Etsy provides a platform used by creators of arts and crafts and handmade goods to sell their products.
Etsy Stock And Sales
Late Monday, Etsy reported second-quarter revenue of $132.4 million, up 30% from the year-ago quarter and beating the consensus estimate of $127.1 million. It was the fifth straight quarter of accelerating sales growth, from the year-ago period.
It missed estimates on adjusted earnings, reporting 3 cents vs. views of 4 cents. But that did not seem to deter enthusiasm.
Etsy reported gross merchandise sales on its platform of $901.7 million. That's up 20.4% from the year-ago quarter and beats views of $886 million. It also raised revenue guidance for 2018 by about $5 million.
KeyBanc Capital Markets analyst Edward Yruma raised his price target on Etsy to 51 from 48.
"While management has made significant changes in a short period of time, we think the Etsy turnaround remains in the early innings," Yruma wrote in a note to clients.
In June, Etsy raised the transaction fees it collects from sellers to 5% from 3.5%, which is expected to support additional investments in the growth and health of the marketplace.
Progress On Initiatives
"We made progress executing against each of our four key initiatives, including launching several product enhancements aimed at bolstering trust and improving conversion rates, utilizing location as an attribute in search ranking, structural improvements to SEO, and announcing monthly subscription packages," the company said in its quarterly earnings report.
RBC Capital Markets analyst Mark Mahaney raised his price target on Etsy to 45 from 42. He maintained a rating of sector perform.
"The second quarter was another strong and improving fundamentals quarter for Etsy, with growth acceleration and margin expansion," Mahaney wrote in a note to clients.
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