By Senad Karaahmetovic
Shares of Pinterest (NYSE:PINS) are trading more than 11% higher today after Piper Sandler analysts raised the rating to Overweight from Neutral with a new price target of $30 per share (up from $25).
The analysts see “multiple tailwinds” supporting Pinterest stock into 2023. They outlined three key reasons driving today’s upgrade of PINS stock.
- The 2023 Ad buyer survey points to an improved ad product and rising share;
- Proprietary data points to better MAU trends; and
- See a path to margin expansion ahead.
They are also positive about Pinterest’s new leadership and investor activism. The analysts believe the social media company may also announce a buyback plan.
“PINS ended 3Q22 with $2.7BN in cash. With ~$500MM in FY23E FCF by our model, PINS is sufficiently profitable and over-capitalized. At 3Q PINS said they “continue to evaluate (the) broader capital allocation strategy.” PINS could repurchase ~10% of the float and still have ~$1BN in cash & equivalents on the B/S,” they wrote to clients in the upgrade note.
Pinterest stock was down 35% year-to-date based on yesterday’s closing price.