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Pinterest Stock Forecast: Do Analysts See More Returns?

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Pinterest stock has more than doubled this year amid the rally in tech stocks. It fell to a 52-week low of $10.10 in March amid the crash in U.S. stock markets. However, it has risen four-fold from the March lows and made a 52-week high of $45.20 in October. What’s Pinterest stock forecast and do analysts see more returns from the image-sharing company?

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Pinterest stock prediction

Pinterest went public in April 2019 and priced its shares at $19. The stock began trading at $23.75—up 25 percent from its issue price. It closed at $18.64 last year which meant that it delivered a negative return in the year of its listing. 

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Pinterest stock continued to tumble and in March 2020 it fell to almost half of its issue price as investors sold stocks amid uncertainty over the COVID-19 pandemic. However, Pinterest’s recovery has been swift. The stock has more than doubled from its IPO price in April 2019.

Interestingly enough, Pinterest went public on the same day as Zoom Video Communications, a company that has seen a great deal of success in 2020. Pinterest’s returns pale in the shadow of the stellar returns from Zoom stock, which is up 13-fold from its IPO price. Zoom has been among the largest benefactors from the change in consumer behaviour during the pandemic.

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What's the forecast for Pinterest stock through 2020?

According to the data compiled by MarketBeat, Pinterest has an average 12-month price target of $33.06, which is below the current stock price. The highest price target for Pinterest stock is $48, while the lowest price target is $21. Since July, Pinterest stock has been trading above its average price target.

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It is not uncommon for stocks to trade above their consensus price target for a long period of time. Tesla is a perfect example, and the stock has generally traded above its consensus price target over the last year. Most of the time, analysts have been raising Tesla’s target price after the stock rallied.

Is Pinterest stock a buy?

Currently, Pinterest does not have any “strong buy rating.” 14 analysts have given it a “buy” or equivalent rating while 13 have rated it as a “hold.” None of the analysts polled by MarketBeat has rated the stock as a “sell.”

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In September, many brokerages issued bullish notes on Pinterest stock. On Sept. 2, Robert W. Baird raised Pinterest stock price target from $35 to $41 while maintaining its “outperform” rating. On Sept. 14, KeyCorp initiated coverage on Pinterest with a $44 price target. Guggenheim also initiated coverage on Pinterest towards the end of September with a “buy” rating and a $48 price target. Incidentally, Guggenheim’s price target is currently the street high target for Pinterest stock.

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“We believe the platform’s differentiated use case, unique advertiser position, and ability to attract a growing, engaged community are under appreciated by investors. The company is refining its recommendations and expanding content verticals, which we believe will increase the service’s utility and drive higher frequency,” said Michael Morris, Guggenheim analyst.

What is Pinterest's stock valuation?

Pinterest stock is valued at an NTM (next 12 months) enterprise value to revenue multiple of 14.5x. Pinterest is not yet making profits like many of the tech companies that have listed over the last year. However, Pinterest is witnessing strong growth and its revenues grew almost 60 percent year over year in 2018 and 51 percent in 2019. That said, analysts expect its revenue growth to slow down to 28 percent this year before rising to 33.6 percent next year.

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