Buy eBay and Sell Etsy, Morgan Stanley Says
Morgan Stanley is bullish on eBay and bearish on Etsy. Here’s what you need to know.
Shares in eBay (EBAY) are moving higher today while Etsy (ETSY) stock is moving lower after investment bank Morgan Stanley (MS) issued calls on both e-commerce stocks early this morning.
"We believe eBay is best-positioned to capture upside from generative AI in 2024," Morgan Stanley analyst Nathan Feather said, according to Bloomberg.
Feather upgraded eBay’s stock to Buy from Sell and boosted his price target to $62 to $35, making him the most bullish analyst following the stock, according to Bloomberg. The new price target gives the stock implied upside of more than 22% from current levels.
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Feather also recommended a pair trade with Etsy, downgrading the stock to Sell from Hold and lowering his price target to $55 from $64, according to Barron's. The new price target on Etsy represents downside of about 18% from current levels.
"We expect the growth profiles to converge and model both grow earnings before interest, tax, depreciation, and amortization (EBITDA) at a 5% '23-'26 compound annual growth rate," Feather said, adding that eBay trades at a 35% discount to Etsy on 2025 EBITDA, according to Barron's.
Argus agrees with the eBay call
Agreeing with the bullish stance on eBay, Argus Research has a Buy rating on the stock and a $58 price target.
"Following the 2015 PayPal spinoff, and the sale of StubHub, the Classifieds business, and other assets, eBay has become a more focused e-commerce retailer," Argus said in a March 8 report. "CEO Jamie Iannone is working to strengthen the eBay Marketplace platform through a blizzard of new features and enhancements centered on improving the user/seller experience, including new seller tools underpinned by generative AI models."
Analysts' average target price on eBay is $50.98, according to S&P Global Market Intelligence, giving the stock essentially no implied upside in the next 12 months or so. The Street's consensus recommendation is Hold.
Truist disagrees with the Etsy call
Truist analyst Youssef Squali strongly disagrees with Morgan Stanley’s stance on Etsy, reiterating his Buy rating and $85 price target in a March 18 report.
"We believe ETSY is an attractive business model with a differentiated offering and a number of product and marketing levers to drive growth and profitability over the next several years," Squali said. "The opportunity ahead, coupled with management's execution track record, fuel our confidence that Etsy can execute against these initiatives and create value for shareholders over the next 12 months."
Analysts' average target price on Etsy is $81.73. Although that gives ETSY implied upside of more than 20% over the next year or so, the Street's consensus recommendation stands at Hold.
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