4. Pinterest, Inc. (NYSE:PINS)
Average Price Target Upside: 33.58%
Number of Hedge Fund Holders: 61
The fourth best communication stock to buy on our list is Pinterest, Inc. (NYSE:PINS). It is a visual search platform where users discover, save, and act on ideas across several interests. The company has around 500 million active users globally and the platform is popular among women and Gen Z. It monetizes through ads, offering various formats like standard images, video, shopping, carousel, and interactive ads. Ads are served through an auction system, which are optimized for either brand awareness or conversions.
AI and machine learning improve ad delivery, which in turn, improve performance for advertisers. The platform also provides tools for campaign management and measurement and helps brands assess their ad effectiveness. The company’s advertising appeals to brands across multiple industries, offering custom solutions based on their goals.
Tipranks reported that on October 2, Wells Fargo analyst Ken Gawrelski reaffirmed his Buy rating on Pinterest (NYSE:PINS) due to several positive factors. He expects the company to achieve around 20% revenue growth, with the stock trading at a favorable valuation below 12 times the projected 2026 EBITDA. Gawrelski believes the company will surpass the upper end of its Q3 revenue guidance and beat consensus-adjusted EBITDA estimates, which show margin expansion. The analyst also views the company’s improvements in ad load and the release of the AI-driven Performance+ product.
The analyst expects steady Q4 growth and controlled expenses, with optimism that a housing market recovery will boost engagement.
Moreover, The Fly reported that KeyBanc analyst Justin Patterson raised Pinterest’s (NYSE:PINS) price target from $43 to $45, maintaining an Overweight rating. The firm expects stronger-than-expected Q3 revenue and profitability due to a solid ad market and favorable currency movements. Despite macro uncertainty and a shorter holiday season, KeyBanc expects Pinterest’s product cycles will support continued growth into 2025.
ClearBridge Mid Cap Strategy stated the following regarding Pinterest, Inc. (NYSE:PINS) in its Q3 2024 investor letter:
“Selection in the communication services sector also weighed on performance, primarily driven by a decline in Pinterest, Inc. (NYSE:PINS), which operates a social media platform where users can express their interests and discover ideas through images they “pin” to their pages. Having been a strong contributor in the first half of the year, the company gave back some of its gains as investors captured gains and an uptick in economic uncertainty pushed out spending by leading advertisers. We capitalized on this weakness to add to the position, as we believe that several of its internal initiatives to increase the monetization of its users and become a better value-added advertiser to its customers are coming to fruition.”
