Etsy Just Hit The Lower Rail Of An Upwardly Sloped Trend Channel

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Etsy is set to report earnings again in the first week of May. I couldn’t find the exact date on the company’s investor relations page, but three different sites have the report coming out on May 5 or 6.

Expectations for the earnings report are pretty high. Over the last 60 days, the consensus EPS estimate has jumped from $0.40 to $0.87. There have been 11 analysts move their estimate up and there are only 12 analysts with estimates. This tells us that optimism is running pretty high and it could be setting a very high bar for the company to clear.

I mentioned earlier how bullish analysts are toward the stock and that is only one sentiment indicator. Another indicator that shows above-average optimism is the short-interest ratio. The ratio is at 2.03 currently and that is lower than the average which falls in the 3.0 range. The number of shares sold short has dropped sharply over the last year, falling from 14 million last April to 6.16 million in mid-March. The current short interest level is the second-lowest reading in the past year.

The overall outlook for Etsy is pretty solid based on the technical and fundamental factors. The sentiment and the valuation measurements are a concern investors need to keep in mind if they establish a long position on the stock. Personally, I look for Etsy to continue its upward trend over the next few quarters at the very least. We may see some spikes and pullbacks long the way, but I look for the trend channel to help guide the stock higher.

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