Deutsche Bank has initiated coverage on Pinterest, advocating a buy rating due to the platform's significant upside potential in revenue and margin levels against a backdrop of growing user engagement. The bank set a price target of $43 for Pinterest shares, indicating a promising upside from the current trading level of $30.64 observed on Monday afternoon. Analyst Ben Black emphasized that there exists a clear trajectory for Pinterest to enhance both revenue streams and profit margins from current positions, particularly as its valuation multiples remain substantially lower when compared to industry peers.
This situation presents a compelling rationale for making Pinterest a strategic asset within investment portfolios. The firm highlighted that Pinterest's array of products and its ongoing partnerships bolster this positive outlook. Moreover, the platform's foray into adjacent categories is anticipated to catalyze user growth and boost overall engagement levels.
In Black's analysis, he characterizes Pinterest as a significantly under-monetized platform leveraging a sprawling and increasingly personalized 'digital catalog' format, which is particularly appealing to an affluent user base with high purchasing intent. Looking at future prospects, revenue is projected to expand at an 18% compound annual growth rate (CAGR) from fiscal years 2024 to 2026, a figure that aligns closely with market consensus.
In a report released at the end of July, Pinterest had already surpassed expectations by announcing a remarkable 21% increase in second-quarter revenue, totaling approximately $853.7 million. Moreover, Deutsche Bank anticipates a 6% CAGR for global monthly active users from 2024 through 2026. Under a favorable scenario forecasted by Deutsche Bank, revenue could even accelerate at a 25% growth rate throughout this three-year timeframe, with global monthly active users potentially increasing by 9%.
Current Price: $30.59, Change: +0.21, Percent Change: +0.69 $PINS.