Pinterest stock is inching up after an upgrade by Piper Sandler. The firm views a recent selloff in shares—paired with recent growth in mobile users—as an opportunity for investors.
The firm upgraded Pinterest stock (ticker: PINS) to Overweight from Neutral, while lowering its price target to $53 from $58. Shares were up 2%, at $33.81, in recent trading, while the S&P 500 was flat.
Piper Sandler’s upgrade follows a downgrade from Guggenheim‘s Michael Morris, who cited the sequential global user declines, on Tuesday. Globally, the company’s aggregate audience fell to 218.1 million in December, versus 226.9 million in November and 229.3 million in October.
But Piper Sandler’s Thomas Champion argues that monthly active users “are not created equal” and the headwinds have been driven mostly by nonmobile users, which contribute less to revenue. Nonmobile users in the U.S. were just 18% of total platform users, while mobile users made over 78%, according to the December data cited by Champion. Mobile users have grown from the second quarter to the third quarter, Champion noted.
Mixed user trends drove Pinterest shares down roughly 45% in 2021.
Champion said the shares look oversold while improvements to Pinterest’s Ebitda have been underappreciated. Consensus estimate for this year’s Ebitda have nearly doubled since January 2020, he wrote. (Ebitda refers to earnings before interest, taxes, depreciation, and amortization.)
Lastly, the photo-sharing website still has an opportunity to monetize roughly 60% of its international users in countries like India and Indonesia while its e-commerce surface continues to evolve, Champion argues.
Pinterest is rated as a Buy by nine analysts tracked by FactSet. Three analysts rate it as Overweight, 18 as Hold, and one as Sell.
Write to Karishma Vanjani at [email protected]
