Pinterest Stock Upgraded After Positive Investor Day
Pinterest's stock saw an increase on Wednesday after analysts upgraded it in response to positive commentary shared at an investor day. This comes after the social media company provided business updates, outlining its long-term expectations.
Last year, Chief Executive Bill Ready joined the team and implemented operational changes to navigate a challenging advertising market. Ready reassured investors that Pinterest has returned to monthly active user growth, with improvements in engagement and ad impressions over the past year. The company aims to achieve mid-to-high teens revenue growth and improve its earnings before interest, taxes, depreciation, and amortization margins to the low 30% range within the next three to five years.
Previously, management projected third-quarter revenue growth in the high single digits. However, Chief Financial Officer Julia Donnelly now expects revenue to exceed expectations and land at the high end of that range.
Analyst Tom Forte from D.A. Davidson responded to these positive developments by upgrading Pinterest's rating from Neutral to Buy. Furthermore, he increased the price target from $25 to $35.
Pinterest Receives Upgrades and Positive Outlook from Analysts
Citi analyst Ronald Josey has recently upgraded Pinterest's shares to Buy from Neutral and has raised the price target to $36 from $31. This upgrade comes as a result of Josey's belief that the product investments made by Pinterest in the past year have significantly improved the user experience. He also acknowledges the greater relevance and personalization of content across the platform.
Pinterest, like many other social media platforms, has been facing challenges due to a slowing advertising market. However, there are signs of improvement in the ad business, indicating a positive outlook for Pinterest.
John Forte, a prominent analyst, expressed confidence in Pinterest's management, stating that their ability to achieve financial targets is reflected in the upgrade. Forte believes that engagement on the platform will increase, monetization will improve not only in the U.S./Canadian region but also in European and Rest of World geographies, and financial discipline will be sustained.
Despite these positive developments, Pinterest still has significant growth potential. Currently, it is less than 1% penetrated in the global and UCAN markets. The company remains confident in its ability to continue growing significantly in the long term.
As of now, Pinterest's shares have experienced a 5.4% increase to $27.62. In total, the stock has gained 14% in value this year.
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