On Thursday, RBC Capital maintained its Outperform rating Pinterest Inc (NYSE:) with a firm price target of $48.00. The firm saw an increase in the platform’s overall ad load compared to July, particularly in secondary categories. The analysis also noted that Amazon’s (NASDAQ: ) presence on Pinterest is growing primarily through first-party (1p) rather than third-party (3p) ads.
RBC Capital’s analysis shows that the increase in advertising load has not had a negative impact on user engagement. In fact, user engagement and cost per thousand impressions (CPM) have shown improvement since the second quarter. The firm interprets Amazon’s uptick in activity on Pinterest as a positive sign, indicating that Amazon is finding value in advertising on the platform, which could potentially limit any downside to Pinterest’s financial outlook.
The analyst’s comment underscores the debate among investors over Amazon’s growing stake in Pinterest’s ad space. Some are optimistic, suggesting that Amazon’s involvement underscores the value it finds in Pinterest and acts as a buffer against financial risks. Others think Amazon may be stepping in to fill larger gaps in the auction market.
Despite the range of comments, RBC Capital remains positive about Pinterest’s outlook. The firm points to the platform’s direct links as a value-adding feature that Pinterest can monetize more effectively over time. This bullish stance comes in the context of the company’s stock trading below 15 times its estimated 2025 enterprise value to EBITDA (EV/EBITDA), an attractive valuation offered by RBC Capital.
In other recent news, Pinterest Inc received an overweight rating from Cantor Fitzgerald, indicating their confidence in the company’s solid financial outlook and upward revisions to its fiscal 2025 revenue and EBITDA. Continued growth of Pinterest.
Similarly, Piper Sandler maintained an Overweight rating on Pinterest shares, citing the potential benefits of lower ad prices as Pinterest continues to roll out new products, lowering its price target. In contrast, Loop Capital recommended a Buy rating on Pinterest shares, despite lowering their price target to $39.00 from $49.00, citing the company’s long-term growth potential.
In recent developments, Pinterest has announced an executive transition with Chief Product Officer Sabrina Ellis stepping down to take on an advisory role before leaving the company. The transition comes with a comprehensive severance package, including a cash payment of $600,000 and the issuance of 340,442 shares of restricted stock awards.
Analysts at various firms continue to highlight Pinterest’s potential for continued revenue growth and margin expansion. That’s despite the company’s third-quarter guidance missing expectations. Goldman Sachs credited Pinterest’s management strategies, including moves toward vertical diversification of advertisers and third-party partnerships, as key drivers for the platform’s long-term growth.
InvestingPro Insights
With Pinterest Inc (NYSE:PINS) earning an Outperform rating from RBC Capital, InvestingPro data and insights provide a deeper look into the company’s financial health and market sentiment. Note that Pinterest’s market capitalization is $20.05 billion, which reflects its significant presence in the social media industry. The company’s current stock price-to-earnings-per-share P/E ratio is high at 102.57, but adjusted numbers for the trailing twelve months to Q2 2024 suggest a more moderate ratio of 66.59. This suggests that investors are pricing in future earnings growth.
Two InvestingPro Tips highlight key financial aspects for Pinterest. First, the company holds more cash than debt on its balance sheet, which creates a solid foundation for operational flexibility and potential investments. Second, net income is expected to rise this year, signaling an improvement in profitability that could be a catalyst for future stock performance. It’s also worth noting that while the stock is trading at high earnings, the PEG ratio for the trailing twelve months to Q2 2024 is 0.63, suggesting that the company’s earnings growth may not be fully reflected in the current share price.
For investors looking for more information, InvestingPro has 14 more InvestingPro Tips that provide comprehensive analysis of Pinterest’s financial performance and market trends. These tips offer a valuable resource for those looking to make informed investment decisions in the context of Pinterest’s evolving market position.
This article was developed with support from AI and was reviewed by an editor. See T&C for details.
