A promising partnership with Amazon and a strengthening advertising business make Pinterest a standout stock for 2024, according to analysts at RBC. PINS stock rose in trading Monday.
RBC Capital Markets analyst Brad Erickson late Sunday boosted his outlook on PINS stock to outperform, or buy, from a neutral rating. RBC set a price target of 46 for PINS stock, implying a 31% upside from Friday's closing price.
"With investors thirsty for non-megacap ideas for (2024), PINS stands out as a way to play the shift of intent-based ad platforms chasing impulse shopping's $241 billion ad spend," wrote Erickson in the client note.
On the stock market today, PINS stock gained 1.3% on the day to close at 35.36.
Watching The Amazon Partnership
Advertisers are looking to capitalize on both the intent-based advertising of search platforms, as well as the "impulse-heavy" social media platforms, Erickson wrote. Further, Pinterest is offering a crossover in both type of ads, with a growing focus on selling ads with direct links to product listings.
Central to that effort is a multiyear ad partnership Pinterest announced with Amazon earlier this year. Product ads sold through Amazon will automatically appear on Pinterest through the deal. 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.
Analysts have been closely watching the progress of that partnership. Pinterest's leadership previously said that meaningful revenue won't arrive until early next year. But RBC says its recent analysis found that Amazon is representing a greater share of ads on Pinterest than earlier this year.
Beyond that, Erickson wrote that feedback from advertisers on the overall direct link efforts is positive.
"And while we think large advertisers are largely still seeing most of (direct links) benefit today, hearing the proof-of-concept on conversion combined with Amazon ramping (third-party) ad load, PINS has never had a clearer path to serving a longer tail of advertisers," Erickson wrote.
PINS Stock: Winning Over Wall Street
While PINS stock is still trading well below a high in 2021, the stock is gaining support among investors this year. Pinterest is up 46% this year, helped by several upgrades from Wall Street analysts.
Jefferies upgraded PINS stock to a buy rating, along with Snap, on Nov. 30. Before that, BofA Global upgraded PINS stock from neutral to buy in early November, after the company's earnings topped expectations. For its third quarter, Pinterest reported a 154% year-over-year adjusted earnings increase to 28 cents per share. Revenue increased 11% annually to $763 million.
And prior to earnings, Pinterest stock was upgraded to a buy rating by Stifel analyst Mark Kelley, who also saw potential in its new partnership with Amazon.
