Evercore Just Boosted Its Price Target on Pinterest (PINS) Stock

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Visual discovery platform Pinterest (NYSE:PINS) saw its shares rise off the back of an encouraging analyst assessment. Specifically, Evercore analysts believe the company’s advertising partnership with e-commerce giant Amazon (NASDAQ:AMZN) can yield significant returns. As a result, they boosted their price target on PINS stock. Nevertheless, lurking in the background, bearish traders have wagered against Pinterest, setting up an intriguing duel for control.

According to a Seeking Alpha report, Evercore experts led by Mark Mahaney see a “significant” ramp in ads from Amazon. To justify the optimism, the analyst notes that recent checks showed a roughly 30% ad load from the e-commerce juggernaut across six of Pinterest’s top categories. In a research letter, Mahaney wrote the following:

“We have increased confidence that this Amazon partnership can materially move the needle for PINS based on high commercial intent on Pinterest (50% of users have shopping intent), positive unit economics (we estimate that PINS will retain approx. 70% of every Amazon Sponsored Listing $ generated on Pinterest), and PINS’ relatively small revenue base (just $30MM in incremental revenue boosts PINS revenue growth by 1%).”

Subsequently, Mahaney lifted his price target of PINS stock to $50 from $45. Interestingly, shares have been on the move over the past few months. In the trailing half-year period, Pinterest gained about 36% of its equity value.

Bulls Love PINS Stock, but So Do the Bears

Adding to the positive sentiment, Mahaney believes that Pinterest should generate 20% revenue growth this year. Further, fiscal revenue may rise 5%, and EBITDA and free cash flow (FCF) could swing up between 8% and 12%.

Of great interest to stakeholders of PINS stock is the underlying return on investment related to the sponsored listing campaigns on Pinterest. Per Evercore’s research, such campaigns can yield ROI stats that are “ballpark close” to what the advertisers see on Amazon itself. Moreover, Mahaney cites one performance marketer who has intentions for a mid-20% spending growth on Pinterest.

Therefore, the bulls enjoy justification for their optimism. After all, PINS stock is off to a solid start to the year, gaining about 4%. That said, Pinterest has also piqued the curiosity of bearish traders, who believe that shares have risen too much.

Looking at Fintel’s options flow screener — which exclusively filters for big block trades likely made by institutions — major entities have made some bold wagers. Among the options yet to expire stand as follows:

  • 1,281 contracts sold of the PINS Feb 2 ’24 39.00 Call (premium received of $40,186).
  • 2,004 contracts sold of the PINS Feb 9 ’24 38.00 Call (premium received of $189,180).
  • 1,667 contracts sold of the PINS Feb 16 ’24 41.00 Call (premium received of $61,655).
  • 2,500 contracts sold of the PINS Feb 23 ’24 42.00 Call (premium received of $170,000).

At the moment, PINS stock trades several cents under $38. However, circumstances could get interesting if the bulls can succeed in pushing PINS above the aforementioned strike prices ($38 to $42).

Why It Matters

According to TipRanks, Wall Street analysts altogether rate PINS stock as a consensus strong buy. This assessment breaks down as 22 buys, seven holds and zero sells. Overall, the average price target lands at $40, implying over 6% upside potential.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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