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HomeMarketPinterest Stock Got Crushed in 2022. An Analyst Sees Better Days Ahead.

Pinterest Stock Got Crushed in 2022. An Analyst Sees Better Days Ahead.

Pinterest added approximately three million monthly active users in North America in the third quarter versus the second.

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Dreamstime

A slowdown in advertising spending has hit social media stocks, but Piper Sandler’s analysts believe
Pinterest
‘s stock can rebound.

On Tuesday, Thomas Champion and his team upgraded their rating on Pinterest (ticker: 
PINS
) to Overweight from Neutral and raised their target price to $30 from $25. Their price target now is 27% higher than Pinterest’s Monday close.

Shares of Pinterest jumped 7% to $25.23 after the market opened on Tuesday.

The photo-sharing platform’s stock is likely to continue gaining, according to Champion, who sees “multiple tailwinds” in 2023.

For one, Pinterest’s share in the ad market could improve, the analyst said, citing his recent ad buyer survey, which showed the company would make up 8% of social budgets in 2023, up from roughly 5% last year. Champion partly credits Twitter’s loss of many advertisers as well as improvements made by Pinterest to allow clients to target their ads better.

Champion also cited the company’s most recent earnings report, which showed Pinterest added approximately three million monthly active users in North America in the third quarter versus the second. Piper Sandler’s monthly data suggest the trend has continued into the fourth quarter: U.S. monthly active users grew more than 5% in November from a year ago, which was consistent with October, but higher than September.

Lastly, Champion points to attainable Wall Street estimates. Consensus among analysts tracked by FactSet is for roughly15% revenue growth in 2023 from 2022. That’s “well below the approximately 50%-plus growth seen
previously,” the analyst said. “We think this is a low bar and PINS is positioned to exceed this growth next year.”

Still, only 39% of Wall Street analysts side with Champion, with a bullish rating on the stock. A primary concern hammering the stock, which has tumbled 35% this year, has been the slowdown in the economy, which has led brands to cut their ad spending. Plus, some investors are on the sidelines as they wait to see new CEO Bill Ready, who took over in June, prove himself.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

Credit: marketwatch.com

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