On Monday, shares of online craft marketplace Etsy Inc. (ETSY Quick QuoteETSY - Free Report) are surging, up over 16% in afternoon trading after Citigroup (C Quick QuoteC - Free Report) gave the stock a ‘Buy’ rating and a price target of $14 earlier today.

Analyst Mark Kelley initiated coverage, writing that “Consensus revenue estimates are far too conservative, particularly on the Seller Services business (we’re 4% and 7% above the Street here in 2017/2018).”

Citigroup believes that Etsy's Seller Services division will provide growth for the company; this business chargers sellers extra fees for services like product promotion or expedited check-out.

Kelley also sees Etsy having total revenue of $365 million, higher than the current consensus of $353 million. For its Seller Services business, Kelley projects revenues of $204 million, above the current consensus of $196.8 million.

"The core Etsy offering, simply listing an item for sale, is what attracts a seller to the platform, but Etsy's Seller Services offerings are additive and in some cases higher margin services which sellers can utilize in order to either make the handling of orders more efficient or that allow for effectively maintaining an online presence," Citigroup continued.

Etsy is set to report its Q2 fiscal 2016 results on Tuesday, August 2. For EPS and revenue, Zacks estimates EPS of a loss of three cents on revenues of $83 million.

Etsy currently has a #3 (Hold) on the Zacks Rank.

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