Evercore ISI, an investment firm, has upgraded Pinterest (NYSE:PINS) for multiple reasons, citing the stabilization of digital advertising spending as one of the key factors. Analyst Mark Mahaney, who recognized the positive developments in the company, has raised his rating on Pinterest stock from in-line to outperform, along with setting a $41 price target. He highlights the anticipated recovery in ad spending during the second half of the year and the operational improvements implemented by CEO Bill Ready.
Furthermore, Mahaney identifies a fundamental turning point for Pinterest, anticipating significant revenue growth acceleration and substantial margin expansion over the next two to four quarters. He predicts a noteworthy increase in EBITDA, expecting very high double-digit growth. In terms of valuation, Mahaney considers the current enterprise value-to-EBITDA ratio of 27 times as reasonable. He also anticipates Pinterest to generate consistent free cash flow, with free cash flow margins of 20% or more by 2025.
Following Evercore ISI’s positive outlook, Pinterest shares experienced a 1.5% increase during regular trading hours on Monday, and an additional 3.5% rise during extended-hours trading.
In summary, while other analysts express a bullish sentiment towards Pinterest, Evercore ISI’s upgrade of Pinterest reflects the firm’s optimism about the stabilization of digital ad spending and the positive changes implemented by Pinterest’s CEO. The anticipated recovery in ad spending, combined with expected revenue growth and margin expansion, contribute to the upgraded rating. The market has responded positively to this news, with Pinterest stock experiencing gains. While opinions may vary among analysts, the overall outlook for Pinterest appears to be optimistic.
Featured Image: Pexels @ Brett Jordan
Author Faith Yakubu 
