Pinterest Inc ( NYSE: PINS ) rallied this morning after a Piper Sandler analyst turned bullish on the image sharing platform citing “multiple tailwinds” for 2023.
Pinterest stock should be worth $30
Thomas Champion now sees upside in this social media stock to $30 that translates to about a 25% premium on its previous close.
He’s convinced that Pinterest will expand its footprint in ads next year, thanks to an improved product and the fallout at Twitter Inc . Champion sees its recent agreement with activist Elliott Management as a positive catalyst as well.
We like the new leadership and investor activism. The lows are likely already in.
Last week, Pinterest announced a layoff, which, the analyst expects, will also help with margins. Versus the start of 2022, Pinterest stock is down nearly 30% at writing.
Pinterest Inc will continue to add users
In its latest reported quarter , Pinterest added 3.0 million monthly active users (MAUs) in the United States and Canada combined – a promising trend that Champion expects will continue moving forward.
Lastly, the analyst upgraded Pinterest stock to “overweight” because he sees a buyback coming.
Pinterest ended Q3 with $2.7 billion in cash. With ~$500 million in FY23E free cash flow by our model, it’s sufficiently profitable and over-capitalised. At 3Q, PINS said they continue to evaluate the broader capital allocation strategy.
Street is estimating about a 15% growth in revenue for 2023, which is quite conservative compared to the kind of growth we’ve seen at Pinterest in the past, Champion concluded.
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