Shares of Pinterest can jump 25% from here as the social media company improves user growth and monetization on its platform, according to Goldman Sachs. Analyst Eric Sheridan upgraded shares of Pinterest to buy from neutral, saying he came away from a recent meeting with senior Pinterest management with increased confidence. Sheridan also hiked his price target on the stock to $31 per share. The stock jumped 5% in the premarket. “We upgrade the shares of Pinterest … on the back of improved user growth/engagement trends in the short/medium term and the potential for upside to revenue growth trajectory and operating margin estimates as we move into 2023/2024,” Sheridan wrote in a Wednesday note. The image sharing company came under pressure this year — the stock is down 32% in 2022 — as it dealt with a pivot away from growth names, as well as slowing ad spending and increasing competition. Still, Sheridan expects Pinterest will continue to benefit from a shift in consumer engagement and social commerce online. According to the analyst, the company’s leaders are focused on monetizing its platform, and are working to raise the amount of inventory that users can purchase. Pinterest remains focused on investing in its company in the short-term. “Our recent industry channel check and 3rd party data work has given us increased confidence in Pinterest’s ability to grow monetization and capture a greater share of ad budgets as management executes against its shopping/commerce opportunity,” Sheridan wrote. “Further, we see increased visibility on the post-pandemic MAU trajectory as third-party data indicates user growth & engagement has stabilized and is seeing some signs of re-acceleration in Q3,” Sheridan added. —CNBC’s Michael Bloom contributed to this report.
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