BofA Securities upgraded Etsy to Buy from Neutral and raised its price objective to $105 from $88, saying the marketplace's recent growth trajectory appears increasingly structural and that the brokerage's own estimates remain conservative.
The firm attributed the change to what it described as stronger execution under CEO Kruti Patel Goyal's growth strategy, improvements in mobile engagement, and the potential for more than $1 billion in share buybacks funded by proceeds from the sale of Depop to eBay.
Third-party data cited by the brokerage showed U.S. sales growth of 21% year over year in June and 17% in July. BofA also noted that mobile app gross merchandise sales continued to expand at a double-digit pace, and that mobile users exhibit a lifetime value about 40% higher than other buyers. Those patterns, the firm said, suggest scope for improved personalization, stronger conversion and greater marketing efficiency.
On forward estimates, BofA increased its 2027 marketplace gross merchandise sales growth forecast to 4.5% from 3.0%. The brokerage projected adjusted EBITDA of $912 million and non-GAAP net income of $676 million for 2027. It also raised its 2027 non-GAAP earnings-per-share estimate to $6.38 from $5.91, which it described as above its prior forecast and roughly in line with consensus Street estimates.
BofA argued that features such as conversational and agentic search could play to Etsy's strengths, given the platform's differentiated inventory of one-of-a-kind products. The brokerage added that lower digital advertising costs and increased use of owned marketing channels could contribute additional operating leverage.
The firm expects more than $1 billion of share repurchases through 2027 following the Depop sale. BofA based its new $105 price objective on 16 times projected 2027 non-GAAP earnings, which it noted is below the 21-times median multiple for U.S. e-commerce and marketplace peers. The brokerage said accelerating buybacks make earnings-per-share a more relevant valuation metric than EBITDA.
Context and implications
Under BofA's view, improving mobile engagement and higher mobile user lifetime value are central to Etsy's path to greater marketing efficiency and margin expansion. The prospect of meaningful buybacks after the Depop sale also factors into the firm's valuation framework, increasing the emphasis on EPS as a core metric.
While the upgrade reflects confidence in execution and unit-economics improvements, the timeframe and realization of buybacks, continued mobile momentum and marketing-cost dynamics are key variables that will determine whether the brokerage's forecasts materialize.