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On Friday, JPMorgan analyst Doug Anmuth increased the price target on Pinterest Inc (NYSE:PINS) shares to $42 from $35 while maintaining a Neutral rating on the stock. The adjustment follows Pinterest’s impressive fourth-quarter results and first-quarter guidance, which propelled the stock to close up over 19%. With a current market capitalization of $22.7 billion, Pinterest has shown strong financial health, earning a "GOOD" overall rating from InvestingPro analysis.
Pinterest has shown significant growth, with clicks to advertisers soaring over 90% year-over-year in the fourth quarter. This growth comes even as the company laps the initial impact of Direct Links, which saw clicks increase by more than 100% in the fourth quarter of 2023. The company’s revenue grew 17.7% in the last twelve months, with a robust gross profit margin of 78.9%. Pinterest’s efforts in improving personalization, relevance, engagement, and actionability have led to a year-over-year increase in weekly and monthly active users, which is now at 62%. According to InvestingPro data, the company maintains a strong financial position with more cash than debt on its balance sheet.
The first-quarter revenue guidance anticipates a 15-17% growth in foreign exchange neutral terms, or 13-15% reported growth. This outlook takes into account the tougher comparisons from the previous year, which included benefits from Easter timing and leap day. Despite these factors, Pinterest does not foresee a fundamental improvement in food and beverage advertising spend.
Pinterest’s Performance+ platform has been beneficial for advertisers, offering lower costs per action and cost per click, as well as campaign setup automation. The company plans to further enhance its product offerings, with return on ad spend bidding for Performance+ expected to launch by the end of the first quarter.
While adjusted EBITDA margin expansion is set to slow from the 510 basis points year-over-year increase seen in 2024, Pinterest is on track to meet its three to five-year adjusted EBITDA margin target of 30-34%, as outlined during its 2023 Investor Day. JPMorgan’s revenue forecasts for Pinterest in 2025 and 2026 have been raised by approximately 2% each, with adjusted EBITDA estimates for those years increasing by 6% and 3%, respectively. Based on InvestingPro analysis, Pinterest appears slightly undervalued at current levels, with analysts setting price targets ranging from $28 to $51 per share. The platform’s comprehensive Pro Research Report, available with an InvestingPro subscription, provides detailed insights into Pinterest’s valuation metrics and growth potential.
The $42 price target for December 2025 is based on an estimated 17 times the 2026 free cash flow of $1.5 billion, which correlates to roughly 16 times the 2026 adjusted EBITDA of $1.6 billion. While JPMorgan remains neutral on Pinterest stock, the firm acknowledges the company’s progress in narrowing the gap between value creation and value capture. However, consistent strong growth and execution are needed for a more constructive stance on the stock.
In other recent news, Pinterest has seen a series of positive adjustments from various financial firms. BMO Capital Markets increased their price target for the company to $46, maintaining an Outperform rating. This comes on the back of Pinterest’s robust user engagement and anticipated growth in direct response advertising revenue. Similarly, Goldman Sachs raised their price target to $47, citing robust revenue growth and strategic initiatives that are expected to drive momentum.
Bernstein SocGen Group also upgraded Pinterest’s stock rating from Market Perform to Outperform, raising the price target to $47. This followed Pinterest’s strong performance and promising Q1 revenue growth guidance. Analysts at Monness, Crespi, Hardt also upgraded Pinterest’s stock to Buy, setting a new price target of $40, highlighting the company’s successful execution of strategic initiatives and an undemanding valuation.
In another development, Pinterest’s CEO, Bill Ready, was awarded performance-based restricted stock units valued at a target of $18 million. This move is seen as a strategic effort to align the CEO’s incentives with long-term shareholder value creation. All these developments are part of recent happenings that have been shaping Pinterest’s business landscape.
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