By Angela Palumbo
Pinterest stock surged after a Guggenheim analyst upgraded shares of the social media company. The team said it has confidence in Pinterest's growth potential following a recent stock pullback.
Michael Morris upgraded shares of Pinterest to Buy from Neutral and raised his price target on the stock to $40 from $39. Shares were up 4.8% to $33.97 in Monday trading. The stock has jumped 18% this year but is still down 2.5% over the past 12 months.
"We believe that the recent share price pullback creates an attractive opportunity to invest in the still early-stage global user, monetization and profit growth opportunity at Pinterest," Morris wrote in a research note on Monday.
Pinterest stock tumbled 14% on Nov. 8 as investors concerned about the company's spending on artificial intelligence initiatives sold despite a third-quarter earnings beat. Pinterest's AI efforts include improving recommended images and ads.
Sentiment has shifted. Shares popped 19% on Feb. 7 after the company posted its first-ever billion-dollar revenue quarter and forecast higher-than-expected sales for the current quarter. Global monthly active users also reached a record in the fourth quarter.
Morris wrote that he expects Pinterest to improve monetization faster than the overall digital advertising market from 2025 to 2027 as more people use the platform and AI improves the ad experience.
"While we acknowledge that macroeconomic-driven ad market concerns are likely to persist, we see Pinterest, with more than two-thirds of revenue from performance-based advertisers, as better positioned than businesses with greater brand exposure," he added.
Morris isn't alone in his optimism. Of the 43 analysts surveyed by FactSet, 34 say the stock is a Buy, eight say it's a Hold, and one says Sell.
"As a shopping site, Pinterest has macro related advertiser spending risk, but growing traffic and improving monetization should help maintain growth," BofA Securities analyst Justin Post wrote on Monday. He rates Pinterest as a Buy with a $46 price target.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 24, 2025 13:48 ET (17:48 GMT)
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