Investing.com -- TD Cowen on Tuesday initiated coverage on Pinterest Inc (NYSE:PINS). with a "buy" rating, giving stock a price target of $38, as it sees strong monetization opportunities driven by user engagement and artificial intelligence enhancements.
Shares of Pinterest were up 0.6% at $30.6 premarket. Stock’s $38 price target implies 25% upside.
The brokerage highlighted Pinterest’s unique position as a product discovery platform, noting that 44% of U.S. users visit the site to "find or shop for products," far outpacing social platforms like Facebook (NASDAQ:META) and Instagram.
TD (TSX:TD) Cowen said Pinterest’s use of AI to personalize ads and improve relevance has helped maintain user engagement, even as ad load increases.
“As advertising platforms raise ad load, they typically risk harming the user experience and subsequent engagement. We see PINS as differentiated in its ability to ramp ad load on high intent surfaces while maintaining or improving the user experience through targeted ads,” wrote analyst in the note.
Data from the survey conducted by brokerage showed U.S. time spent on Pinterest rose year-over-year, including a 15% jump among 18-to-34-year-olds, its fastest-growing user segment. The ability to balance higher ad loads with user experience could lead to broad-based growth in revenue across regions, TD Cowen said.
TD sees further monetization opportunities through AI-driven lower funnel ads, international ad expansion, and partnerships with major players like Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOGL). TD Cowen forecasts Pinterest's revenue to grow at a 13% compound annual rate through 2029, with an 18% rise in EBITDA, supporting the potential for higher valuation multiples.