On Monday, KeyBanc updated its outlook on Pinterest Inc . (NYSE:PINS), raising the price target to $48 from the previous $37 and maintaining an Overweight rating on the stock. This adjustment reflects a positive stance on the company's growth prospects, particularly as it enters a new phase of its product cycle.
The firm anticipates Pinterest to post a robust fourth-quarter performance, projecting approximately 14% growth, which slightly surpasses expectations. The forecast for the upcoming year is also optimistic, with revenue growth guidance set between 15% and 17% year-over-year. This outlook is based on a strong advertising market for retail, e-commerce, and consumer packaged goods, coupled with Pinterest's own efforts in product innovation and strategic partnerships.
KeyBanc's revised expectations extend into the years ahead, with an increase in revenue estimates for 2024 and 2025 by 3% and 4%, respectively. Moreover, the projections for EBITDA have been raised by 9% for both years. The new price target of $48 is grounded in a valuation of 25 times the estimated 2025 enterprise value to EBITDA.
The analyst's commentary highlights the underlying factors contributing to Pinterest's favorable outlook. The company is poised to benefit from the momentum in its relevant markets and its continued focus on innovation and collaboration. These elements are expected to provide sustained tailwinds through the year 2024.
InvestingPro Insights
In light of KeyBanc's optimistic update on Pinterest Inc. (NYSE:PINS), the real-time metrics from InvestingPro provide a comprehensive picture of the company's current financial health and market performance. With a market cap of 26.81 billion USD, Pinterest's valuation reflects investor confidence in its growth trajectory.
The company's revenue growth over the last twelve months as of Q3 2023 stands at 6.46%, with a quarterly uptick of 11.49% in Q3 2023, indicating a steady increase in its business activities. Despite a negative operating income margin of -9.62% in the same period, Pinterest's gross profit margin is robust at 76.53%, which suggests that the company has a strong handle on its cost of goods sold relative to its revenue.
InvestingPro Tips reveal that Pinterest holds more cash than debt on its balance sheet and has liquid assets that exceed short-term obligations, providing financial stability. Analysts predict the company will be profitable this year, aligning with KeyBanc's positive stance. Moreover, Pinterest has seen a strong return over the last three months, with a price total return of 28.47%, and is trading near its 52-week high, with the price at 99.57% of this peak.
For those looking to delve deeper into Pinterest's financial prospects, InvestingPro offers additional insights. There are 10 more InvestingPro Tips available for subscribers, which could further inform investment decisions. The InvestingPro subscription is now on a special New Year sale, with discounts of up to 50%. To take advantage of this offer, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription. These tips and metrics can be a valuable resource for investors seeking to understand the potential risks and rewards associated with Pinterest's stock.
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