Pinterest Inc. provides “a unique platform for visual discovery and idea sharing around products, events, and activities,” according to Raymond James, and that’s one reason its stock looks attractive.
Aaron Kessler of Raymond James initiated coverage of Pinterest
PINS,
shares with an outperform rating and $33 target price late Wednesday, writing that the company has users of “high commercial intent” who are appealing to advertisers.
“Pinterest’s high-intent audience (similar to Google search) should also enable the platform to relatively outperform other digital advertising channels during a slowing macro environment,” Kessler wrote. “Additionally, given its on-platform first-party signals like searches, saves, and board curation, Pinterest is less at risk from ad privacy headwinds.”
He’s upbeat about the revenue-growth profile of the company, writing that Pinterest could grow revenue at a rate of at least 10% over the long term as the company invests in areas like video, personalization and new ad products.
“We also believe Pinterest is becoming more of an always-on platform for advertisers versus [an] experimental platform, which should drive greater ad spend,” Kessler commented.
See also: Pinterest has ‘ramping revenue growth’ in its future, analyst says in upgrade
There’s earnings potential as well, in Kessler’s view. Though the company saw some bottom-line pressure in 2022 as it invested in the business while seeing revenue headwinds, Kessler predicts the company can achieve a 30%-plus margin of earnings before interest, taxes, depreciation and amortization over the long run.
“Pinterest has recently noted that it intends to return to meaningful margin expansion in 2023,” he wrote.
His recent consumer survey further indicated that the platform resonates with its users and that new efforts seem to be paying off. The company is seeing “strong early adoption of short-form video” and traction among younger consumers, the survey indicated.
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This post was originally published on Market Watch
