By Sam Boughedda
MKM Partners downgraded Pinterest (NYSE:PINS) to Neutral from Buy, maintaining a $27 per share price target in a note to clients on Friday.
The analysts said in a research note that Pinterest shares now have a balanced risk-reward, while the firm's ad agency survey results show a marginally negative read-through.
"PINS shares are +52% since late July vs. S&P 500 -2%, while 2023 and 2024 consensus estimates for PINS have steadily declined. At current levels, we believe the risk/reward is fairly balanced. Furthermore, our proprietary ad agency survey results have marginally negative read-throughs for Pinterest as compared to Facebook, Instagram, YouTube, and Snap (SNAP, Neutral, $10 FV), implying a potential market share loss amidst a somewhat weak ad spend market in 1H23," explained the analysts.
Therefore, the survey results, alongside recent industry trends, and Q4 data points on mobile app traffic, mean MKM is cautious around Q4 MAU and the implied Q4 revenue acceleration in the company's guidance.
"All in, we are moving to the sidelines as we see the risk/reward as fairly balanced with downside risk at $22 vs. potential upside reward at $32. We view larger and more profitable platforms as having defensible market shares if we are headed toward a recession in 1H23," the analysts concluded.