JPMorgan has recommended buying shares of the Etsy marketplace. Why does the bank expect a 20% increase?

JPMorgan is optimistic about the recovery of Etsy, an online marketplace for handmade and vintage goods, and has recommended buying its stock, according to CNBC. The bank’s analysts upgraded the company’s rating from “neutral” to “bullish” and raised the price target from $85 to $100, implying growth potential of nearly 22% compared to the closing price on August 6.

Etsy's stock price rose 3.8% on August 7, and has gained nearly 54% since the beginning of the year.

The company is increasing sales as it continues to turn its business around—this could drive further growth in its stock over the next year, wrote a team of analysts led by Brian Smilek.

“Etsy has been growing its gross merchandise sales (GMS) for three consecutive quarters. ‘We believe the company is well-positioned for sustainable growth as the marketplace’s fundamentals improve and it reaps the benefits of its social commerce initiatives,’ Smileak said.”

The forecast was announced after Etsy reported its second-quarter financial results on August 5, during which the company posted a 9.3% increase in core business revenue to $611.5 million. Total revenue increased by 6.2% to $668.3 million, exceeding Wall Street’s forecasts by 3.5%. Adjusted EBITDA also beat expectations: $195.3 million versus $182.1 million.

Etsy now expects gross sales to grow by a mid-single-digit percentage for the full year 2026, or approximately 4–6%. This will continue the platform’s positive sales momentum: GMS growth rates increased from 0.1% in the fourth quarter of 2025 to 7.5% in the second quarter of 2026, according to JPMorgan’s estimates.

Separately, analysts evaluated Etsy’s initiatives in the areas of search, mobile apps, and customer loyalty programs, which help attract active shoppers, increase engagement and retention, and improve the ecosystem of active sellers.

At the same time, on August 7, Wedbush reaffirmed its recommendation to hold Etsy shares in the portfolio—that is, neither to increase nor to reduce the position. At the same time, analysts raised their price target slightly, from $80 to $88, which is 7% above the company’s closing price.

In its second-quarter earnings report, Etsy announced a 12% reduction in its workforce, and according to Wedbush’s estimates, this will help improve margins somewhat and support the upward trend in sales. The platform’s marketing expenses are paying off: higher-quality product data shared with Google’s search engine allows for competitive bidding in auctions and improves efficiency, analysts noted.

All of GMS's growth drivers are heading in the right direction, but the situation will become more challenging in the second half of the year, as purchase frequency remains below last year's levels, Wedbush warned.

Of the 30 analysts tracking Etsy stock, only nine recommend buying it. The majority—19—advise holding the stock in their portfolios. There are two sell recommendations.

This article was AI-translated and verified by a human editor