Analysts Upgrade Pinterest Stock, Predicting a Positive Future
RBC Capital Markets analysts led by Brad Erickson have upgraded social media giant Pinterest to Outperform from Sector Perform, stating that impulse purchases are here to stay and that the company stands to benefit. They have also raised their price target on the stock to $46 from $32 in a report titled “When Browsing Turns to Buying.” Alongside this upgrade, the analysts have increased their estimates for full-year earnings and revenue.
In premarket trading on Monday, Pinterest’s shares saw a 3.2% increase to reach $36.03. As of now, the stock has surged 44% this year, making it a popular pick among investors throughout the year.
RBC explained that, with investors seeking non-megacap ideas for ’24, Pinterest stands out as an excellent opportunity to tap into the ever-growing impulse shopping trend, which accounts for a $241 billion ad spend. The analysts are particularly interested in the platform’s long-term potential due to the significant changes being made by its management. While monthly active user growth and advertiser spending may fluctuate, RBC believes Pinterest has the potential for significant and lasting platform changes.
According to RBC, a transition is taking place in the online sphere. Both Google and Amazon primarily focus on “intent-oriented purchases,” but platforms like Pinterest are increasingly adopting strategies and products from both intent-oriented and impulse-heavy platforms.
Aside from being a favored mega-cap option in ’24, RBC believes that Pinterest offers the opportunity to capitalize on Amazon’s high demand for ads, as well as providing a hedge against concerns related to retailers like Temu and Shein. RBC’s positive outlook for Pinterest comes amid recent reports that Shein, an online retailer, has filed for a confidential IPO with the SEC.
Over the past several months, analysts’ sentiments towards Pinterest have become increasingly bullish. According to FactSet, only 41% of analysts rated Pinterest as a Buy in June, compared to the current 67%.
