Brean Reiterates Etsy Is A Buy Ahead Of Earnings

In a new research note, analysts at Brean Capital said that the market should "expect strong results" from Etsy Inc (NASDAQ: ETSY) this earnings season.

The analysts said they expect Etsy will see $60 million in quarterly revenues, 47.1 percent growth. Critically, however, Etsy should see a 32.5 percent growth in active buyers and a 22.5 percent growth in active sellers, according to the note.

Notably, Brean said Etsy is making progress in international expansion, mobile and seller services. Brean argued that, "one of the keys to Etsy's future revenue growth will be its ability to add local international sales to what is today primarily a cross-border trade effort."

With presence in 19 of the 20 largest countries by GDP, Etsy should see international gross merchandise sales of $176 million – a 38.4 percent increase. That represents just 31.9 percent of Etsy's total GMS, according to Brean.

Yet, while international sales will drive revenue growth, Brean said it expects "mobile sales to serve as a catalyst for the stock." The company will "enroll, maintain and engage" buyers with mobile initiatives, all of which aim at reducing the friction to find and make a purchase. Brean forecasted that mobile merchandise sales would account for nearly 40 percent of total GMS, rising 51.9 percent to $222 million.

The analysts increased their price target to $23, from $19 prior.

Since its IPO in April, Etsy has shed nearly 31 percent as of Tuesday's $20.85 closing price. This will mark Etsy's first earnings report as a public company.