BofA Adjusts Pinterest Forecasts Amid AI Optimism and Challenges

BofA Adjusts Pinterest Expectation Amidst Market Challenges

BofA Securities analyst Justin Post has made adjustments to the estimates concerning Pinterest, Inc. (NYSE: PINS), while still keeping a Buy rating in place. The price target for the stock has been maintained at a positive $39, reflecting confidence in the company’s future despite current headwinds.

Estimating a Shift Due to Market Pressures

The adjustments by Post arise from persistent weakness noted in the food and beverage advertising category. This, combined with challenging year-on-year comparisons and foreign exchange impacts, has led to the lowering of estimates moving forward.

Revenue and Earnings Adjustments

For the upcoming fourth quarter, Post has cut revenue expectations by $4 million due to foreign exchange considerations, now anticipating a year-on-year growth of 16%, slightly less than the previous guidance of 15% to 17%. Furthermore, for the first quarter, revenue estimates have been adjusted downwards to $817 million, while EBITDA has been reduced by 7%, putting it at $132 million.

Concerns About Initial Quarter Growth

Growing concerns regarding the high initial quarter estimates have prompted Post to predict a 10% revenue increase, which is below the consensus of 14%. This adjustment factors in the financial pressures expected from the Leap Year and Easter events, alongside ongoing food and beverage sector weaknesses.

Looking Ahead: Potential for Recovery in 2025

In a broader view, estimates for 2025 have also seen reductions, with revenue expected at $4.1 billion—a 1% decrease—and EBITDA at $1.18 billion, reflecting a 2% cut. Still, Post expresses optimism that growth may rally post-first quarter, expecting to reach up to 15% by the fourth quarter.

AI Solutions as a Catalyst for Growth

The potential of artificial intelligence solutions, alongside third-party deals and a stabilizing growth rate in the food and beverage category, might help uplift sentiment throughout 2025. The analyst believes management will highlight strategies aimed at returning to long-term growth rates and improving margins, even with a reported 15% increase in headcount during the third quarter.

Investing in Pinterest: Available Options

For investors interested in gaining exposure to Pinterest, options include the Global X Social Media ETF (NASDAQ: SOCL) and the Trenchless Fund ETF (NYSE: RVER). These investment vehicles present opportunities for those looking to participate in Pinterest's market journey.

Current Price Action of Pinterest

As of the latest publication, shares of Pinterest have experienced a slight decline, down 1.23%, trading at $31.42. This reflects some of the market sentiment that has resulted from the recent adjustments and overall industry trends.

Frequently Asked Questions

What are BofA's new estimates for Pinterest?

BofA has lowered forecasts for Pinterest, projecting a revenue of $817 million and an EBITDA of $132 million for the first quarter.

Why did BofA reduce Pinterest's revenue estimates?

The reductions stem from ongoing weaknesses in the food and beverage ad sector, tough year-over-year comparisons, and impacts from foreign exchange.

What is the expected revenue growth for Pinterest in 2025?

Post estimates that Pinterest's revenue may reach $4.1 billion in 2025, though this reflects a 1% reduction from previous projections.

How might AI solutions impact Pinterest's growth?

AI solutions are anticipated to potentially accelerate growth, contributing positively to revenue recovery and stabilizing sentiment in the upcoming years.

What ETFs offer exposure to Pinterest?

Investors can explore the Global X Social Media ETF (SOCL) and the Trenchless Fund ETF (RVER) for exposure to Pinterest stock movements.

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