The pandemic and its subsequent government mandated lockdowns brought up some unpredictable winners, but now that trends have shifted, companies like Pinterest, Inc. (PINS) must adapt. The do-it-yourself, home décor, and idea sharing social media platform got a boost from all of the heavy volume during the darker days of COVID-19, but now is seeing a deceleration in search traffic.
Meanwhile, the company remains afloat. PINS recently beat Wall Street consensus estimates on revenue and its earnings per share, and experienced an increase in average returns per user over the last quarter.
Delivering his hypothesis on the stock’s uncertain outlook is Brian Fitzgerald of Wells Fargo, who expressed his enthusiasm for Pinterest’s long-term strategy of monetization. He rated the stock a Buy, and lowered his price target to $42. Despite the fact that this new target comes considerably lower than his previous one at $64, it still represents a possible 12-month upside of 54.13%.
Driving his bullish stance is PINS attractive valuation, which has come down significantly over the last year, over 65%. Fitzgerald also attributed Pinterest’s strong array of offerings to his optimistic view, touching on its highly popular Watch Tab, and its relatively recently launched augmented reality capabilities for testing furniture in one’s home.
All of these products are properly aiding Pinterest’s “inspiration to realization” experience, as Fitzgerald puts it.
He went on to summarize that he views “the shares as attractive given strong audience and engagement growth, continuing (and prospective) monetization gains owning to ad technology investments and international expansion.”
There were, of course, concerns voiced by the statistically accurate analyst. He noted increased competition drawing away users’ engagement, as well as a November shift in algorithm structure from Google (GOOGL) searches. The latter of those has impacted Pinterest’s searched traffic, and thus its overall volumes.
Using TipRanks data, it can be identified that the total estimated visits to pinterest.com rose 27.23% over the last quarterly period. However, during that same time, PINS share price fell 28.66%. This strong divergence indicates high interest in the company, at a possibly attractive valuation, falling in line with Fitzgerald’s opinion.
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