Pinterest Gets The Picture: JPMorgan Sees Upside Despite Stock Slump

Pinterest Inc 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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