Pinterest (PINS) has found another supporter on Wall Street who is betting a turnaround in the business will pan out this year.
"Amazon partnership [that is] live ahead of 2023 holidays, improving engagement trends and higher ad load will allow PINS to deliver accelerating and above-consensus revenue growth," Wells Fargo analyst Ken Gawrelski wrote in a client note on Wednesday, adding that he sees a "strong catalyst path over next 6-12 months."
The analyst upgraded his rating to Overweight (buy equivalent) and hiked his price target to $34 from $23.
Pinterest stock rose 6% to around $28 in early trading.
Gawrelski's call-out on improving engagement trends may be on the mark.
"I think it's hard to predict the macroeconomic environment," Pinterest CEO Bill Ready told Yahoo Finance Live at Cannes Lions International Festival late last week (video above). "There are bright spots in the ad market. I think there are other parts of the ad market that are challenged. So there's still puts and takes across those. But it's good to see that there are bright spots that are emerging there, and so I think that's encouraging across the industry."
A large part of Wall Street's growing hope around Pinterest's prospects is tied to optimism about Ready's leadership.
Ready just passed his one-year mark as Pinterest CEO after a C-suite career spanning the likes of PayPal and Google.
He is focused on making Pinterest a more "shoppable" platform to drive sales — tapping into his experience in commerce at the aforementioned tech giants. This includes the late April deal with Amazon.
The veteran tech exec is also focused on ensuring Pinterest is a positive social media platform, or more so than rivals Twitter and Meta (META). That messaging may help it gain more advertisers.
"We really think that positivity, and particularly more positive outcomes in emotional well-being, really needs to become a standard for the social media industry," Ready added.
These efforts, coupled with fresh cost cuts, are expected to drive margin expansion this year for Pinterest in the face of a still choppy ad sales market.
Pinterest's stock is up about 15% year to date.
"We believe Pinterest is making the optimal strategic move to outsource monetization to third-parties to overcome its attribution and scale challenges," Wells Fargo's Gawrelski said. "This includes an announced partnership with Amazon, now expected to be live in time for the 2023 holiday season, and future expected partnerships with other scaled retail media networks."
"This should allow Pinterest to focus its resources on growing engagement and improving overall user experience," he concluded. "Outsourced monetization coupled with early signs of progress on improved engagement and ad load should drive a materially stronger revenue and margin outlook for the company."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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