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Shares of Pinterest Inc. were powering higher in Monday morning action after an analyst at UBS cheered the company’s advertising opportunity and execution.
UBS’s Lloyd Walmsley turned bullish on Pinterest’s
PINS,
stock over the weekend, upgrading it to buy from neutral and boosting his price target to $35 from $27.
“Advertisers tell us Pinterest is taking bolder steps and moving more rapidly under its new CEO, Bill Ready, which gives us more confidence in the likelihood of execution overall,” he wrote in his latest note to clients.
Pinterest’s stock was up nearly 4% Monday morning.
Walmsley said he sees multiple ways for Pinterest to improve its monetization, including through partnerships. For one, he said, the company has the potential for “rapid potential improvement” in how it makes money internationally, given its limited progress there thus far.
“Our analysis suggests that by just increasing search and feed ad load from 25% to 40%, and video ad load from 10% to 20%, represents 34% upside to our current ’24 total revenue estimates for Pinterest,” he wrote. “Secondly, adding demand partners with an international advertiser base would allow Pinterest to rapidly monetize in some of its markets where its user base is substantial but its advertising business remains nascent.”
A ramp of international monetization could generate nearly $500 million of revenue if Pinterest were to achieve the same share of the market in its regions outside the U.S. that it currently has inside the U.S., according to Walmsley’s math.
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Overall, Walmsley is upbeat about Pinterest’s ability to successfully leverage partner relationships. He highlighted strong initial feedback from advertisers about the company’s partnership with Liveramp, which “alone suggests significant improvement in ad efficacy that should drive budget, and further monetization partnerships could unlock incremental demand.”
The company is early in various initiatives around measurement, he noted, but Walmsley thinks “the stage is set for ramping revenue growth.”
Shares of Pinterest have gained 17% so far this year and are up 12% on a 12-month basis.
