Investing.com — Shares of Pinterest (NYSE:) rose on the stock market Tuesday after positive endorsements from Goldman Sachs and RBC Capital, both of which see significant growth potential for the social media platform.
Pinterest shares are currently up more than 1% to around $32.75 per share.
Goldman Sachs added Pinterest to its Americas Conviction List and forecast robust revenue growth and EBITDA margin expansion, while RBC Capital highlighted the company’s undervalued platform and strategic advertising partnerships.
Goldman Sachs is particularly bullish on Pinterest’s growth trajectory, predicting mid-to-high-teens revenue growth and annual EBITDA margin growth of about 300 basis points over the next five years.
“PINS is well set up to continue to strengthen revenue growth in the mid to high teens and deliver steady expansion of adjusted EBITDA margin,” Goldman noted, adding that the company trades at a valuation similar to Meta (NASDAQ:) while cash earnings are growing at a much faster pace.
Key drivers include higher ARPU (average revenue per user), better user engagement, and high incremental margins. Goldman set a $46 12-month price target for Pinterest, citing significant upside potential.
RBC Capital also highlighted Pinterest’s growth potential, especially thanks to the company’s changes such as the implementation of direct links and a third-party partnership with Amazon (NASDAQ:).
The initiatives are expected to increase ad relevance and conversion rates, improving return on ad spend (ROAS) for advertisers.
RBC Capital views Pinterest as under-revenue, but believes the platform has significant potential to accelerate revenue growth without having to dramatically expand its user base. RBC maintained an Outperform rating and set a price target of $48, based on expected 2025 EBITDA of 25.5x.
Both investment banks highlighted the importance of Pinterest’s advertising strategy and partnerships, with Goldman highlighting the company’s ability to leverage an extensive advertising offering, and RBC underscoring the potential for higher ad loads and improved engagement.
