Morgan Stanley Upgrades Pinterest On Shift To Social Shopping

Pinterest Inc PINS has ad tools to capitalize on accelerating e-commerce and social shopping trends, and can sustain faster growth, according to Morgan Stanley.

The Pinterest Analyst: Brian Nowak upgraded Pinterest from Equal-Weight to Overweight, raising the price target from $34 to $44.

The Pinterest Thesis: Shelter-in-place orders have driven a “structural change in consumer behavior” and “social online malls” like Pinterest can become increasingly important touchpoints for retailers, brands and merchants, Nowak said in the note.

He added that this shift in consumer behavior will enable leading platforms like Pinterest and Facebook Inc FB to attract more ad dollars, as they help in reaching “shoppers with intent” as well as assist e-commerce transactions.

The analyst believes Pinterest is the “best pureplay to capitalize on this trend.” He noted that the company now has the tools to monetize the high engagement levels.

During the second quarter, Pinterest’s year-on-year revenue growth accelerated from -8% in April to +50% in July, Nowak said. He believes this was driven by automatic bidding for traffic, stronger new advertiser adoption with growing spend from small- and medium-sized advertisers and faster-than-expected uploads of merchant product catalogs.

“Consensus appears to be underappreciating the macro and micro momentum we expect,” the analyst wrote.

PINS Price Action: Shares of Pinterest traded higher by 3% to $36.07 at the time of publication.

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