Pinterest is the IBD Stock of the Day, as PINS stock bounces up from its 10-week line after trading tightly in recent weeks. Analysts with Evercore ISI hiked their target price for Pinterest stock Friday, citing progress for the company's partnership with Amazon.
San Francisco-based Pinterest operates a digital pin board with more than 480 million users. The company primarily makes its money selling online advertising.
On the stock market today, PINS stock rose 1.9% to close at 37.70.
Pinterest shares surged after the company reported better-than-expected third-quarter earnings report in late October. That helped power the stock's 40% gain over the past 12 months.
Shares have consolidated in recent weeks below a 52-week high of 38.66. PINS stock is on the verge of forming a three-weeks-tight pattern. A high earlier this week of 37.65 could serve as an early entry point, though an earnings date of Feb. 8 warrants caution.
Amazon Deal Boosts PINS Stock
PINS stock gains on Friday have been helped by a price target hike from Evercore ISI. Analyst Mark Mahaney reiterated a buy rating for the Pinterest in a new client note and said the firm's advertising partnership with Amazon can "move the needle."
Evercore's new price target of 50, up from 45, represents 35% upside for PINS stock from Thursday's close.
Pinterest announced the partnership with Amazon last April. Product ads sold through Amazon will automatically appear on Pinterest feeds through the agreement. The partnership is part of Pinterest's push to drive more shopping directly from its platform. Also, Amazon's significantly larger advertising business can also bring a greater variety of ads to Pinterest.
The question for analysts, meanwhile, is when those ads can start delivering revenue for Pinterest. Mahaney wrote Friday that Evercore's team of analysts "have noticed a significant ramp up in Amazon ads" over the past few months.
The Amazon deal is part of a push at Pinterest to increase the amount of purchases users make from its platform.
"We know more than half our users view Pinterest as a place to shop, so our focus over the last year has been to make Pinterest more shoppable," Chief Executive Bill Ready said on the company's third-quarter earnings call.
Can PINS Stock Recover Like Meta?
Pinterest is competing for a social media advertising market dominated by Facebook parent company Meta. Analysts project Pinterest annual sales will come in at $3 billion for 2023, compared to $134 billion for Meta.
Skepticism about Pinterest's ability to win share from Meta's Facebook and Instagram contributes to PINS stock trading roughly 60% below a 2021 high point. Meta, meanwhile, has recovered to new highs after facing a slump of its own late in 2021 and 2022.
But Pinterest is picking up momentum with investors as the company focuses on boosting shopping within its platform. An improving digital ad market has also helped.
Analysts often describe Pinterest's users as high-intent. Rather than seeking updates from friends, Pinterest users are often looking for home renovation ideas or fashion advice.
"We have increased confidence that this Amazon partnership can materially move the needle for PINS based on high commercial intent on Pinterest (50% of users have shopping intent)," Mahaney wrote Friday.
Evercore turned bullish on Pinterest last July. Analysts at Stifel, BofA Securities, Jefferies and RBC also upgraded Pinterest to buy or buy-equivalent ratings in the second half of 2023.
Earnings On Deck
Meanwhile, Pinterest is gearing up for its next earnings report. The company reports fourth-quarter results on Feb. 8. Analysts project the firm will post a 13% sales increase to $990 million for the December quarter, according to FactSet. Earnings are expected to rise 76%, to 51 cents per share.
Before that, earnings results from Meta on Feb. 1 and Snapchat parent Snap on Feb. 6 could move PINS stock, as investors look for a read into the state of the digital advertising market.
In the meantime, PINS stock is showing strong technical scores. IBD Stock Checkup shows Pinterest with a best-possible Composite Rating of 99. The rating provides an overall score based on the stock's grade for each of the other IBD SmartSelect Ratings.
Further, PINS stock has a Relative Strength rating of 93 out of 99. That indicates that Pinterest shares have outperformed 93% of stocks tracked by IBD over the past 12 months.
Pinterest is also on the IBD Tech Leaders and Big Cap 20 stock lists.
