Pinterest, the popular social media platform known for its visual discovery and bookmarking features, has caught the attention of investors. Despite underperforming this year with a modest 8% increase in its stock price, Citi analyst Ronald Josey believes it presents a lucrative buying opportunity. As a result, he upgraded Pinterest shares to buy/high risk, confident that the company is on track to turn its business around.
Optimistic Outlook Amidst Challenges
Pinterest faces challenges in an increasingly competitive landscape, but according to Josey, the company’s recent Analyst Day left him more optimistic about its future. He believes that engagement will continue to grow, driven by investments in product development that aim to improve the user experience. Pinterest’s full-funnel approach to advertising and innovative ad strategies are also expected to contribute to improving monetization trends.
With a price target of $36, representing a considerable 37% upside, Citi sees significant potential for Pinterest. The company’s mid- to high-teens revenue growth compounded annual growth rate guidance for the next three to five years further bolsters this positive outlook. Although Pinterest’s comeback is still in its early stages, Citi believes it has a realistic path towards achieving its financial targets.
Citi was not alone in its optimism towards Pinterest. D.A. Davidson’s Tom Forte also upgraded his rating to buy from neutral, citing confidence in Pinterest’s management and their ability to meet financial targets. He raised his price target to $35, representing a remarkable 34% increase from the stock’s previous close.
Forte highlights three key growth strategies that contribute to his positive outlook. Firstly, increasing engagement on the platform is crucial to ensure Pinterest remains relevant in an ever-evolving digital landscape. Secondly, improving monetization opportunities in different regions, including the US, Canada, Europe, and the rest of the world, will drive revenue growth. Lastly, maintaining financial discipline while investing in the company’s future and sustaining high margins are essential for long-term success.
Overall, both Citi and D.A. Davidson see a positive risk-reward profile for Pinterest. Despite its recent underperformance, Pinterest has significant potential for growth and expansion. Its focus on enhancing user engagement and improving monetization strategies aligns with the evolving demands of advertisers and users alike. With a strong belief in Pinterest’s ability to execute its plans and achieve its financial targets, these analysts have tipped it as a stock worth considering for investors.
With their upgrade recommendations and optimistic outlooks, Citi and D.A. Davidson have shed light on the promising future of Pinterest. As the platform continues to refine its user experience, innovate in advertising, and expand its revenue streams, investors may find Pinterest to be an attractive addition to their portfolios.