Goldman Sachs (GS) is bullish on Pinterest (NYSE:PINS) despite the present slowdown in advertising expenditure being a pressure point for the firm’s stock. Goldman Sachs believes in the long-term story of the company.
Pinterest Stock Buy Recommendation
Late in the trading session on Wednesday, an analyst named Eric Sheridan upgraded Pinterest Inc (NYSE:PINS) shares to the Buy recommendation from the Neutral position. Additionally, he increased his price objective, moving it up to $31 from $24.
“Our recent work has given us increased confidence in Pinterest’s ability to grow monetization and capture a greater share of ad budgets,” Sheridan said, referring to his checks with industry sources, conversations with the management, and tracking of third-party data. “Our recent work has given us increased confidence in Pinterest’s ability to grow monetization and capture a greater share of ad budgets,” Sheridan said.
At lunchtime on Thursday, the price of a share of Pinterest stock (NYSE:PINS) had increased by 4.3% to $25.69.
Although the share price is down 29% for the year, it has increased roughly the same amount in the last three months. This is most likely because investors are optimistic that the firm will be able to make a turnaround after activist investor Elliott Management declared in July that they have a stake in the company equaling more than 9%.
Although not much information has been made public on Elliot’s plans, Pinterest CEO Bill Ready stated around two months ago that the firm had had a “very productive and engaging dialogue” with Elliot.
Wall Street had heaped praise on Ready, a former top executive who worked for the Google commerce and payments operation when Alphabet (GOOGL) was still known as Google. Ben Silbermann, a co-founder of the company and who previously held the position of CEO, resigned in June.
Sheridan finds many different reasons to be optimistic, even though many other outcomes are still conceivable.
According to Sheridan, the management is still making investments. They are concentrating on growing the amount of “shoppable” inventory—that is, things that consumers can directly purchase from the site—is positive. Midway through 2020, Pinterest (NYSE:PINS) entered into a deal with Shopify SHOP -1.81%, and the company is also collaborating with third-party platforms.
According to him, increasing the amount of commerce that may take place on the platform would ultimately lead to the business seizing a larger portion of its customers’ advertising expenditures.
However, according to FactSet’s research, 64 percent of Wall Street analysts consider the stock a Hold. They have chosen to remain on the sidelines due to the deteriorating state of the advertising market, the poor monetization of overseas customers, and the rising anxiety that a recession is on the horizon. Sheridan admitted that such were problems, but she stated that they had nothing to do with the efforts being made by management to enhance the platform.
“Despite some uncertainty around the near-term,” he added, “we see Pinterest as positively levered to several long-term secular growth themes.”
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