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On Wednesday, KeyBanc Capital Markets adjusted its financial outlook for Pinterest Inc (NYSE: NYSE:PINS), reducing the price target from $41.00 to $37.00, while still maintaining an Overweight rating on the company's shares. The adjustment was announced following a revision of revenue and EBITDA forecasts for the years 2025 and 2026, with reductions of 2.6%/3.5% and 8.7%/10.8% respectively. According to InvestingPro data, the stock has experienced significant pressure, falling over 21% in the past week and currently trading near its 52-week low of $23.68.
The revised price target comes as Pinterest begins to feel the effects of advertising market challenges starting in the second quarter. KeyBanc's analysis points to the company's significant exposure to the retail and consumer packaged goods (CPG) sectors, suggesting that uncertainties surrounding tariffs and subsequent consumer price and confidence fluctuations could impact advertising budgets. Despite these challenges, InvestingPro analysis shows Pinterest maintains strong fundamentals with a healthy 79.4% gross profit margin and robust revenue growth of 19.35% in the last twelve months.
Despite the present headwinds and the lack of immediate cost-saving measures being factored into the forecast, KeyBanc sees room for future valuation expansion. The firm notes that Pinterest is currently trading at a lower-than-expected near-term enterprise value to EBITDA (EV/EBITDA) multiple, which may be due to investor concerns about the macroeconomic impact on the company's financial model. InvestingPro data reveals the company maintains a strong financial position with more cash than debt and a current ratio of 8.75, suggesting ample liquidity to weather market uncertainties. Subscribers can access 10+ additional ProTips and comprehensive valuation metrics in the Pro Research Report.
Pinterest's performance in 2024 was marked by single-digit revenue growth headwinds from one specific category, mainly beverages. However, KeyBanc believes that as the broader economic picture becomes clearer, Pinterest's strong user engagement, potential for increased ad load, and ongoing monetization initiatives, including shopping features, partnerships, and the Performance+ program, could make it an attractive prospect for investors. The company's financial health score of 3.91 out of 5 on InvestingPro's comprehensive assessment framework indicates strong underlying business fundamentals.
The Overweight rating is supported by the unchanged EV/EBITDA multiple of 16 times the 2026 estimates, which represents a discount compared to the next twelve months' EV/EBITDA multiple of 21.7 times. KeyBanc's stance reflects a conservative EBITDA outlook while also acknowledging the potential for Pinterest's valuation to improve as the macroeconomic environment stabilizes and the company's growth strategies gain traction.
In other recent news, Pinterest Inc has been the subject of multiple analyst evaluations, reflecting varied perspectives on its future performance. Guggenheim analysts upgraded Pinterest's stock rating from Neutral to Buy, raising the price target to $40.00. This decision was based on strong user growth and engagement metrics, with the firm noting the potential for monetization and profit growth driven by AI-enabled advertising. Conversely, Raymond (NSE:RYMD) James downgraded Pinterest's rating to Market Perform, citing concerns over consumer sentiment and tariff impacts, especially within the Consumer Packaged Goods sector.
TD Cowen maintained a Buy rating but reduced the price target from $46.00 to $40.00, attributing the adjustment to macroeconomic uncertainties despite positive advertising trends. Meanwhile, Baird also adjusted its price target for Pinterest to $34 from $42, maintaining an Outperform rating. The revision considered macroeconomic factors affecting advertising budgets, though Baird remains positive about Pinterest's new ad formats and automation improvements. These assessments underscore the mixed outlook on Pinterest as analysts weigh its growth potential against broader economic challenges.
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