Shares of Pinterest (PINS) fell in trading on Monday after top-rated Jefferies analyst James Heaney downgraded the social media platform to a Hold from a Buy and lowered the price target to $32 from $40. The analyst’s new price target implies an upside potential of 7.8% from current levels.
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Heaney’s Rationale Behind the Downgrade
The analyst cited three key reasons for downgrading Pinterest: slower adoption of new ad products like Performance+, fading margin gains after two years of cost optimization, and challenges the company faces in transitioning advertisers from experimental budgets for brands to consistent “always-on” campaigns.
Furthermore, the analyst expressed skepticism about Street estimates projecting mid-teens revenue growth for Q1 2025, labeling them overly optimistic. Contrary to these expectations, the analyst’s forecast for FY25 EBITDA is 4% below consensus, reflecting a more cautious outlook.
Additionally, the analyst noted that while the company has made progress with tools like Direct Links to boost direct response advertising, Heaney warned that sustained ad spending growth may take longer to materialize. Heaney summed up his cautious stance, stating, “Still waiting for a breakout.”
Is Pinterest a Buy, Hold, or Sell?
Analysts remain cautiously optimistic about PINS stock, with a Moderate Buy consensus rating based on 17 Buys and eight Holds. Over the past year, PINS has declined by more than 10%, and the average PINS price target of $39.09 implies an upside potential of 32.5% from current levels.
