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HSBC cuts Pinterest shares target, maintains Buy rating

EditorTanya Mishra
Published 09/16/2024, 01:50 PM
PINS
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An HSBC analyst announced a revised price target for Pinterest Inc (NYSE: NYSE:PINS), reducing it to $39.50 from the previous target of $41.20.


Despite the reduction, the firm maintains a Buy rating on the stock. The adjustment reflects a lowered forecast for the company's fiscal year 2027 adjusted EBITDA, now set at approximately $2,010 million compared to the earlier estimate of $2,126 million.


This change is based on a revised compound annual growth rate (CAGR) for revenue from fiscal years 2023 to 2028, now anticipated to be 17% instead of the previously projected 18%.


The analyst underlined several factors that continue to make Pinterest an attractive investment, including its increasing popularity with advertisers, enhancements made to its advertising platform, a surge in engagement among younger demographics, and the potential for monetization in international markets.


These elements are expected to contribute to the company's outperformance in the sector.


The new price target suggests a circa 37% upside from Pinterest's closing share price on September 13, 2024. This optimistic outlook is sustained even as the price target is adjusted downward. The analyst's statement indicates confidence in the company's growth trajectory and its capability to capitalize on the opportunities ahead.


However, the analyst also pointed out potential risks that could impact Pinterest's performance. Among these are macroeconomic factors that might affect advertising spending, as well as the competitive edge that larger technology companies may have due to their advancements in artificial intelligence tools.


Meanwhile, Piper Sandler maintained an Overweight rating on Pinterest's shares, noting consistent pricing trends, improved engagement, and a considerable expansion of Pinterest's international ad reach, now covering about 64 countries. The firm also highlighted robust engagement in Russia, indicating a positive impact on European monthly active users.


RBC Capital held its Outperform rating on Pinterest, observing an increase in the platform's ad load, particularly in secondary categories. The firm also noted the growing presence of Amazon (NASDAQ:AMZN) on Pinterest, primarily through first-party ads, suggesting potential financial stability for Pinterest.


Cantor Fitzgerald initiated coverage on Pinterest with an Overweight rating, despite the company's underperforming Nasdaq index. The firm expressed confidence in Pinterest's robust financial outlook and promising initiatives expected to contribute to sustained growth.


In other company news, Pinterest announced an executive transition with Chief Product Officer Sabrina Ellis stepping down to assume an advisory role before leaving the company. This transition includes a comprehensive severance package, with a cash payment of $600,000 and the vesting of 340,442 shares of restricted stock awards.


InvestingPro Insights


In light of the recent price target adjustment for Pinterest Inc (NYSE: PINS), real-time data from InvestingPro offers additional insights that could be pertinent for investors. Pinterest currently holds a market capitalization of $19.84 billion, and despite the bearish sentiment reflected in the stock's recent price decline of 33.67% over the last three months, the company holds more cash than debt on its balance sheet, which could be a sign of financial stability.


InvestingPro Tips suggest that Pinterest's net income is expected to grow this year, which may reassure investors looking for signs of profitability. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, with an adjusted P/E ratio for the last twelve months as of Q2 2024 standing at 65.75, and a PEG ratio indicating potential undervaluation with respect to its earnings growth rate.


Furthermore, with a robust revenue growth of 16.22% in the last twelve months as of Q2 2024, Pinterest seems to be maintaining a strong growth trajectory. This aligns with the analyst's recognition of the company's potential for monetization and increased engagement, particularly in international markets. It's also noteworthy that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months, which could bode well for future performance.


For investors seeking more comprehensive analysis and additional InvestingPro Tips for Pinterest, there are currently 12 more tips available, which can be accessed to gain a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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