Pinterest Gets The Picture: JPMorgan Sees Upside Despite Stock Slump

Pinterest Inc (NYSE:PINS) has made "solid progress" in growing users while improving monetization and ARPU (average revenue per user), according to JPMorgan.

The Pinterest Analyst: Analyst Doug Anmuth upgraded the rating from Neutral to Overweight, while raising the price target from $35 to $40.

The Pinterest Thesis: Despite the progress, the company's shares are down 18% from the February highs, underperforming the 3% decline in the S&P 500 during the same period, Anmuth said in the upgrade note.

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Pinterest is insulated from search engine disruption, given that 85% of its MAUs (monthly active users) directly visit the app and more than 90% of its revenue is generated from the mobile app, the analyst stated.

The company is "leveraging its full funnel ad approach and automation/AI capabilities — including Performance+ — to capture a greater share of ad spending among the next tranche of advertisers ($1B-$30B in sales), while some of the larger & more sophisticated advertisers already allocate 5-10% of their budgets to PINS," he wrote.

Pinterest has already achieved adjusted EBITDA margin close to 30% and there is upside to this, given its faster revenue growth and cost discipline, Anmuth added.

PINS Price Action: Shares of Pinterest had risen by 4.81% to $33.44 at the time of publication on Tuesday.

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