Rosenblatt Ambivalent On Pinterest, Waits To Compare To Leading Ad Platforms

Pinterest Inc PINS had a strong run in its first week on the market, and it continued to attract calls in the second week amid a levelling off. Few analysts have weighed in on its prospects, but the ratings are slowly trickling in.

The Rating

Rosenblatt analyst Mark Zgutowicz initiated coverage on Pinterest with a Neutral rating and a $32 price target.

The Thesis

Given the ad competition Pinterest faces in the U.S., Zgutowicz called his forecasts for monthly average users and average revenue per user “aggressive.”

“While we find Pinterest’s visual discovery platform truly unique and its mid-to-low funnel return prospects for advertisers promising, we also acknowledge an incredibly competitive digital ad marketplace and daily time spent on social platforms nearly maxed out,” he wrote in a note.

The analyst considers Pinterest’s depressed margins ready for leverage, but he waits to compare the firm’s potential to the market’s more developed and leading ad platforms. Facebook, Inc. FB and Alphabet Inc Class A GOOGL remain in another league.

His valuation suggests 11-percent upside reflecting Pinterest’s discounted cash flow potential.

Price Action

At time of publication, Pinterest shares traded around $28.50.

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