Street calls of the week: Upgrade for PayPal; downgrades for Etsy, Lululemon
HSBC cautious on AI PC narrative. Earnings may see pressure via smartphone weakness. 10% Free-Float liquidity level may present share price downside protection.HSBC cut its FY25/FY26 EPS forecasts by 3% and 2%, respectively, due to a lack of smartphone restocking momentum and a weaker AI PC CPU narrative. The research team finds it difficult to justify a further re-rating beyond the new target price of $105.
Reduce at HSBC means “When the target price is more than 20% above the current share price, the stock will be classified as a Buy; when it is between 5% and 20% above the current share price, the stock may be classified as a Buy or a Hold; when it is between 5% below and 5% above the current share price, the stock will be classified as a Hold; when it is between 5% and 20% below the current share price, the stock may be classified as a Hold or a Reduce; and when it is more than 20% below the...
Secondly, the company’s product momentum and overall execution, under the new management team, are expected to sustain gross profit growth at a moderate single-digit level, even amidst competitive pressures. In the long term, Oppenheimer sees potential for Etsy to leverage large language models to enhance search and discovery, though this will require significant time and investment, potentially conflicting with margin focus. While Etsy may eventually benefit from a cyclical recovery in its key categories, this is beyond management’s control.
However, due to weaker execution and innovation, Goldman now has fading confidence in the near-term growth prospects for the brand in the US market. The analysts have observed limited signs of material innovation over the summer and were disappointed by the quick removal of the new Breeze through franchise, suggesting choppy near-term execution.
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Etsy plans to test its first-ever loyalty program as it aims to boost salesEtsy says it will begin testing its first-ever loyalty program in September. The effort is designed to boost the e-commerce site's sluggish sales and draw in occasional shoppers. Brooklyn-based Etsy said Wednesday that select buyers will receive an invitation for the program. The program will be called Etsy Insider.
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