Chip stocks fall with Nvidia after data center rev disappointment
On Wednesday, Baird analyst Colin Sebastian adjusted the price target for Pinterest Inc (NYSE:PINS) to $34, down from the previous $42, while maintaining an Outperform rating on the company's shares. The revision follows an analysis of Pinterest's performance and the broader advertising market's response to macroeconomic uncertainties. According to InvestingPro data, the stock has experienced significant pressure, falling over 21% in the past week, with current trading levels suggesting potential undervaluation based on InvestingPro's Fair Value analysis.
Sebastian's comments suggest that although Pinterest experienced positive developments in the fourth quarter and the early part of the first quarter, the platform may be more vulnerable to changes in advertising budgets during uncertain economic times compared to larger platforms. Despite this, the analyst remains optimistic about Pinterest's recent improvements such as new shopping ad formats, deep linking, and enhanced automation, which are expected to help counterbalance some of the challenges in the advertising sector. InvestingPro data reveals strong fundamentals, with the company maintaining a healthy gross profit margin of 79.4% and robust liquidity, as indicated by a current ratio of 8.75.
The revised revenue estimate for 2025 has been set at $4.13 billion, which represents a year-over-year increase of 13.3%, a slight decrease from the previous forecast of $4.18 billion. The adjusted EBITDA projection is now $1.21 billion. The new price target reflects these updated estimates along with a sector multiple contraction.
Sebastian's valuation of Pinterest is based on 4x 2026E EV/Revenues and 15x 2026E EV/EBITDA, which is at the higher end of the spectrum when compared to the company's digital advertising and e-commerce peers, who typically range from 1-7x and 5-30x, respectively. This valuation approach underscores Baird's view of Pinterest's potential for growth and profitability relative to its industry counterparts. For deeper insights into Pinterest's valuation metrics and 12 additional ProTips, including detailed financial health scores and comprehensive analysis, check out the full research report available on InvestingPro.
In other recent news, Pinterest Inc. has been the focus of several analyst updates and evaluations. TD Cowen has maintained a Buy rating on Pinterest while adjusting its price target from $46 to $40, citing macroeconomic concerns despite positive first-quarter advertising checks and a forecasted revenue growth of 14.6% year-over-year. Meanwhile, Guggenheim has upgraded Pinterest's stock rating from Neutral to Buy, raising the price target to $40 due to robust user growth and engagement metrics. Analysts at Guggenheim see the recent dip in Pinterest's share price as an attractive entry point for investors, anticipating above-market-average monetization growth driven by AI-enabled advertising performance.
Raymond (NSE:RYMD) James, however, has downgraded Pinterest from Outperform to Market Perform, following observations of weakening consumer sentiment and challenges in the Consumer Packaged Goods sector. Their analysis suggests potential impacts on Pinterest's advertising revenue due to new tariffs and a softening CPG market. Despite this, Raymond James maintains a positive view on Pinterest's management and strategic focus on shopping.
TD Cowen has also reiterated its Buy rating, emphasizing the success of Pinterest's Performance+ suite of advertising products, which has reportedly led to a 19% increase in checkout revenue for advertisers using the Performance+ Creative tool. This suggests a strong outlook for Pinterest's revenue growth as it continues to expand its advertising offerings. These developments reflect a diverse range of perspectives from analysts on Pinterest's potential amidst current economic conditions.
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