11:35 AM EDT, 07/22/2024 (MT Newswires) -- Etsy ( ETSY ) faces limited upside potential due to spending pressures and intense competition from low-cost rivals, Wedbush said in a note Monday.

"Persistent discretionary retail goods spending pressures and fierce competition from low-cost online rivals limit GMS upside -- as evidenced by soft web traffic trends and Etsy's ( ETSY ) recent moves [to] make a greater distinction between its unique products and those sold on platforms such as Temu."

Despite new marketing highlighting handmade versus machine-made items, these efforts won't resolve consumers' shift to "lower-cost alternatives" in the weak economy expected to last until 2025.

Wedbush expects Etsy's ( ETSY ) Q2 gross merchandise sales to align with guidance, given declining web traffic and user trends. Revenue is forecast to be nearly flat year-over-year, with downside risks for the second-half GMS estimates, Wedbush said, adding that EBITDA margins might be slightly below consensus due to increased marketing expenses.

Wedbush maintained a neutral rating on Etsy ( ETSY ) with a 12-month price target of $65.

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