Raymond James cuts Pinterest stock rating to Market Perform

On Monday, Raymond (NSE:RYMD) James financial services company adjusted its position on Pinterest Inc (NYSE: NYSE:PINS) stock, downgrading it from Outperform to Market Perform. This change in rating follows recent observations in the advertising sector and consumer trends. The stock, currently trading at $25.78, has declined nearly 17% in the past week and is hovering near its 52-week low of $24.91. According to InvestingPro data, Pinterest maintains strong fundamentals with a "GREAT" overall financial health score.

The downgrade was prompted by insights gathered from advertising checks conducted before the announcement of new tariffs. According to Raymond James analyst Aaron Kesler, agency executives reported a standard performance for the first quarter. However, they also noted a decline in consumer sentiment and specific weaknesses within the Consumer Packaged Goods (CPG) sector during March. These factors led to a projected budget reduction of approximately 2-3% for the second quarter. Despite these concerns, Pinterest has demonstrated robust financial performance with a 19.4% revenue growth and an impressive 79.4% gross profit margin in the last twelve months.

Further analysis by Raymond James, which included approximately 35 CPG companies and proxies across various sectors such as food and beverage, alcohol, beauty, and home products, revealed concerns about tariff exposure. This analysis contributed to a more cautious outlook regarding Pinterest’s expectations.

Despite the downgrade, the analyst maintained a positive view on Pinterest’s management team and its strategy focused on shopping. The revised rating reflects the concerns over the potential impact of the softening CPG market and tariff implications on Pinterest’s advertising revenue, which is a significant source of income for the social media platform. InvestingPro analysis reveals that management has been actively buying back shares, and the company maintains a strong liquidity position with a current ratio of 8.75. For deeper insights into Pinterest’s financial health and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The downgrade to Market Perform suggests that Raymond James believes Pinterest stock might perform in line with the broader market in the near term, as opposed to outperforming it, which was the previous expectation. This move signals to investors a shift in the company’s perceived potential based on current market conditions and industry challenges. With analyst price targets ranging from $25 to $55, and the stock currently showing oversold conditions according to technical indicators, investors seeking detailed valuation analysis can find additional insights through InvestingPro’s extensive metrics and expert analysis.

In other recent news, Pinterest Inc. has garnered attention following several analyst updates and a strong fourth-quarter performance. TD Cowen raised its price target for Pinterest to $46, maintaining a Buy rating, after the company reported a year-over-year revenue increase of 18% and an EBITDA that exceeded expectations by 6%. The positive outlook is supported by Pinterest’s forward guidance for the first quarter of 2025, which projects revenues and adjusted EBITDA to be significantly above consensus estimates. RBC Capital Markets also raised its price target for Pinterest to $50, citing the company’s effective strategies in enhancing user engagement and advertising content quality. Analyst Brad Erickson noted that these strategic moves are beginning to yield tangible results, contributing to the firm’s confidence in Pinterest’s growth potential.

Meanwhile, Guggenheim upgraded Pinterest’s stock rating from Neutral to Buy, with a new price target of $40, based on robust user growth and engagement metrics. The firm anticipates above-market-average growth in user base monetization from 2025 to 2027, driven by advancements in AI-enabled advertising. In contrast, Snap Inc (NYSE:SNAP). faced a more challenging outlook as Guggenheim’s analysis highlighted a modest deceleration in global audience reach growth for its Ads Manager in the first quarter. Snap’s management remains cautious about the impact of its new Simple Snapchat feature, currently in beta. These developments underscore the varied landscape of the social media sector, with Pinterest showing promising growth prospects while Snap navigates slower audience expansion.

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