Based On Plans To Improve Advertising, UBS Says This Social Media Stock Can Rally Over 25%

According to UBS, as the new leader pushes the platform to open up previously closed advertising opportunities, Pinterest could experience significant benefits in the future.

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The stock was upgraded by analyst Lloyd Walmsley from neutral to buy. To $35, Walmsley increased his price goal by $8. That suggests an increase of 27.4% from the stock's Friday closing price.

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In a message to clients on Sunday, Walmsley stated: "Advertisers tell us Pinterest is taking bolder actions and moving more quickly under its new CEO, Bill Ready, which provides us some more trust in the likelihood of execution overall." In June, Ready assumed the position.

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In premarket trade, Pinterest increased by 4.4%. In 2023, the stock increased by 13.1%.

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According to Walmsley, Pinterest's partner monetization strategy started to "rapidly improve" in the global market. If the corporation maintains a 1% market share in significant new markets in 2024, an increase in foreign advertising may boost income by around $500 million, according to him. However, he added, if the proportion of typical revenue per user that comes from abroad reaches Facebook's core levels, the business might generate $681 million in revenue in 2024.

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Due to better ad density and relevance, the organization has also noticed an increase in ad loads. He claimed that in the interim, Pinterest was able to raise its pure prices.

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Yet, he noted, the business could benefit from having a major global partner on board, while local small partners can offer extra assistance. According to Walmsley, the business might gain $2 billion through increases with partners, which would enable it to substantially expand both its revenue and ad density. He claimed that partnering with IT businesses might specifically aid Pinterest's efforts in attribution and targeting.

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"We believe that Pinterest's early ad tech collaborations already have improved the perception return on ad spend (ROAS) between many early backer advertisers. We believe that this creates the conditions for revenue acceleration well before adding significant new references of supply, which could lead to a step function improvement in monetization," he said.