Social media giant, Pinterest (NYSE: PINS) inched up in morning trading at the time of publishing on Tuesday after top-rated Evercore analyst Mark Mahaney upgraded the stock to a Buy from a Hold with a price target of $41, implying an upside potential of 35.5% on the stock.
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The analyst noted that there has been a stabilization in ad spending in the second half of this year along with operational improvements. Mahaney stated that the above two points have combined to create a “fundamental” inflection point, with a “material” increase in revenues and expanding margins over the next two to four quarters with “very high double digit” EBITDA growth.
Mahaney pointed out that PINS’ current valuation at 27 times its enterprise value-to-EBTIDA is “reasonable” as its EBITDA grows by 30% and the company aims for free cash flow margins of 20% or more by 2025.
Analysts are cautiously optimistic about PINS stock with a Moderate Buy consensus rating based on 10 Buys and 12 Holds.