Pinterest Inc (NYSE:PINS) received a favorable outlook from Oppenheimer, as the firm initiated coverage with an Outperform rating and set a price target of $45.00. The new rating reflects the platform's unique position in the digital advertising space, with high-intent users who are actively seeking products and inspiration, making it an attractive venue for direct response advertising.
Oppenheimer's coverage notes that Pinterest's relevant advertisements enhance the core user experience, drawing a parallel with the traditional magazine advertising model and resulting in strong returns on investment for advertisers.
The firm also highlighted Pinterest as the fastest-growing digital advertising platform, trailing only behind META (NASDAQ:META) platforms. This growth is partly attributed to third-party integrations with companies like Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL), which have helped to improve auction density and pricing on Pinterest's platform.
Further bolstering the positive outlook is proprietary research conducted by Oppenheimer, which includes a consumer survey, notes from advertiser and agency diligence calls, an analysis of user metrics, and an endemic Serviceable Addressable Market (SAM) analysis.
Despite Pinterest's Daily Active User (DAU) base being smaller compared to other social media companies, Oppenheimer sees potential for increased user engagement and considers the company's valuation attractive at 12 times its EBITDA.
The price target of $45.00 is based on a 17 times multiple of Pinterest's estimated 2026 EBITDA, which represents a 4% premium over its peers. This premium is justified by the expectation of a 42% faster growth in earnings before interest, taxes, depreciation, and amortization from 2023 to 2026 compared to its competitors. This optimistic projection is driving interest in Pinterest's shares as investors consider the potential for long-term growth and engagement on the platform.
In other recent news, Pinterest's stock rating was upgraded from Hold to Buy by Deutsche Bank, citing an under-monetized platform with significant potential. The firm anticipates a 6% compound annual growth rate for Pinterest's global monthly active users. Revenue growth for Pinterest is forecasted at 18% over the next three years, slightly surpassing consensus estimates.
Bank of America issued positive comments on Pinterest's advertising growth prospects, suggesting potential for Pinterest's net revenue to increase by 50% over multiple years. HSBC revised its price target for Pinterest to $39.50 from $41.20, while maintaining a Buy rating.
This adjustment reflects a revised forecast for the company's fiscal year 2027 adjusted EBITDA, now set at approximately $2,010 million.
Piper Sandler maintained an Overweight rating and a $45.00 price target for Pinterest, highlighting consistent pricing trends and improved engagement. The firm also noted an increase in Pinterest's international ad reach, now covering about 64 countries.
RBC Capital held its Outperform rating on Pinterest, observing an increase in the platform's ad load, particularly in secondary categories.
Cantor Fitzgerald initiated coverage on Pinterest with an Overweight rating and expressed confidence in Pinterest's robust financial outlook and promising initiatives expected to contribute to sustained growth. Lastly, Pinterest announced an executive transition with Chief Product Officer Sabrina Ellis stepping down to assume an advisory role before leaving the company.
InvestingPro Insights
As investors digest the optimistic outlook from Oppenheimer on Pinterest Inc (NYSE:PINS), the latest data from InvestingPro offers additional context to the company's financial health and market performance. Pinterest is currently trading at a high earnings multiple with a P/E ratio of 107.71, which adjusts to 69.42 when looking at the last twelve months as of Q2 2024. This high multiple could be indicative of investor confidence in Pinterest's future earnings potential, especially considering the company's expected net income growth this year.
Moreover, Pinterest's ability to manage its finances is reflected in its cash position, holding more cash than debt on its balance sheet, which is a solid indicator of financial stability. This is complemented by the fact that its liquid assets exceed short-term obligations. With a gross profit margin of 78.58% in the last twelve months as of Q2 2024, Pinterest demonstrates strong profitability in its operations. However, it's worth noting that the company's stock price has experienced a significant drop over the last three months, presenting a potential opportunity for investors to buy shares at a lower price point.
While the company's valuation multiples such as P/E, EBIT, and EBITDA are on the higher side, the InvestingPro Tips suggest that Pinterest's revenue growth is robust, with a 16.22% increase in the last twelve months as of Q2 2024. With 12 additional InvestingPro Tips available, including insights on profitability and analyst predictions, investors can gain a more comprehensive understanding of Pinterest's position in the market by visiting https://www.investing.com/pro/PINS.
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