Analysts are becoming more optimistic about
Pinterest
ahead of the photo-sharing company’s quarterly results next week.
On Sunday,
Stifel
analyst Mark Kelley and his team upgraded their call on Pinterest stock (ticker: PINS) to Buy from Hold. Over the past roughly one month, other analysts, including
Citi
‘s Ronald Josey and D.A. Davidson’s Tom Forte, have also moved to Buy ratings.
The company generates revenue on ads targeted at Pinterest’s users, who use the platform for inspiration on everything from kitchen organization to wedding dresses, so the slowdown in advertising that began last year spelled trouble for the stock. The shares fell 33% last year as investors waited to assess the performance of CEO Bill Ready, who took over in June 2022.
At the start of 2023, 39% of analysts tracking the stock rated it at Buy, but that had increased to 59% as of Monday. Though challenges remain in advertising, management has offered an optimistic outlook, making analysts more upbeat.
“We believe we can grow revenue faster than the overall market, with multiple ways to get there, resulting in a mid- to high-teens revenue CAGR [compounded annual growth rate] over the next three to five years,” Chief Financial Officer Julia Brau Donnelly said on a Sept. 19 call with investors.
On Sunday, Stifel’s Kelley said his conversations with agencies that track engagement on Pinterest have turned more positive as the year comes to a close. There is similarly positive commentary about Pinterest’s decision in April to start showing
Amazon.com
(AMZN) Sponsored Product ads to make it easier to shop, Kelley noted.
Plus, “we think there is still plenty of room for growth outside the domestic market,” Kelley wrote. Last year, Pinterest expanded its ad offerings to Latin American markets like Argentina and Chile, but 40% to 45% of its user base is still in countries where the platform doesn’t contain ads, according to Sensor Tower data the analyst cited.
Pinterest also said on the September call that it is thinking about ways to cash in on its base of users in places where it has yet to do so, such as South Korea and Southeast Asia.
Pinterest’s shares were up nearly 3% to $26.75 on Monday. The stock is down 3% since Barron’s recommended buying it in April. The company reports its third-quarter earnings on Oct. 30.
Write to Karishma Vanjani at [email protected]
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