11:05 AM EDT, 07/21/2025 (MT Newswires) -- Etsy's ( ETSY ) core gross merchandise sales growth is likely to re-accelerate in next year or two, potentially giving the company a "more balanced" catalyst path, Morgan Stanley said in a Sunday note.

The investment firm said it expects easing comps and a reduced tariff risk to boost the company's gross merchandise sales and accelerate revenue growth with continued take rate expansion. Etsy ( ETSY ) also faces a better macro environment and potential benefits from foreign exchange, Morgan Stanley added.

"We view increased spend per buyer or frequency as the primary path for ETSY ( ETSY ) to reach sustainable, profitable growth... but see frequency gains as highly difficult," Morgan Stanley said. The investment firm noted its ongoing concerns on Etsy's ( ETSY ) ability to drive frequency but said this is already factored into fiscal 2028 expectations.

Morgan Stanley upgraded Etsy ( ETSY ) to equal-weight from underweight, with a higher price target of $50 from $38.

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