By Charley Blaine
Investing.com - Shares of Etsy (NASDAQ:ETSY), the marketplace website focused on crafts and creative goods, soared Tuesday after the company beat fourth-quarter earnings and revenue estimates and forecast a bullish year for 2019.
The stock was up 17% and pushed through $69, forcing at least one investment house to raise its price target. The consensus price target has been $59.15, according to analysts polled by Investing.com. Key Bank Capital raised its price target to $75 from $59.
The company earned 32 cents a share in the quarter, compared with the Investing.com compiled forecast of 20 cents and up from an adjusted 15 cents in the fourth quarter of 2017. Its 2017 earnings on a GAAP basis were inflated by a one-time benefit from the tax law.
Revenue, forecast at $194.9 million, was $200 million, up from $136.3 million a year ago. Gross merchandise sales, a key metric, rose 23% to $1.2 billion. GMS represents transaction values as Etsy collects a fee on each transaction. Holiday sales were up 30%, and a third of its transactions in the quarter involved free shipping, something Etsy encourages its sellers to emphasize. More free shipping translates into more transactions and more revenue for Etsy.
In its presentation for analysts late Monday, the company said it expects revenue growth of 29% to 32% in 2019, with gross merchandise sales up 17% to 20%.
But a key question going forward -- at least in the short run -- will be if the stock, up more than 45% this year alone, has moved too far, too fast.
Overall, technical indicators indicate the stock is a strong buy. But several, including its relative strength index and two stochastic indicators, said the shares are overbought. The Etsy relative strength index (RSI), which measures price movement over, typically, a 14-day period, was at 86.3, where 75 is the level suggesting shares are overbought.