Pinterest ( NYSE: PINS ) shares rose on Wednesday as investment firm Wolfe Research upgraded the social network, noting it has a "'significant runway" for both user growth and revenue over the long-term.
Analyst Deepak Mathivanan raised the firm's rating on Pinterest ( PINS ) to outperform from peer perform and put a $28 price target on it, noting that in addition to the long-term potential for user growth and monetization, the company's new CEO, Bill Ready, should help "the company's pace of execution and progress on [long-term] initiatives."
In addition, Mathivanan noted there are "several positive catalysts" for the stock ahead, including monthly active user growth, margin expansion, product launches and the potential for strategic acquisition, given the presence of activist hedge fund Elliott Management.
"Overall, we think risk/reward skews positively at current levels," Mathivanan wrote in a note to clients.
Pinterest ( PINS ) shares gained more than 4% to $23.01 in premarket trading.
Last month, Pinterest's ( PINS ) new college app, Shuffles, exploded in popularity, topping more than 300,000 downloads in the short time it's been live .
Analysts are largely cautious of Pinterest ( PINS ). It had an average rating of BUY from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates PINS a HOLD .
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Wolfe Research upgrades Pinterest, citing 'significant runway' for user growth, revenue