Jefferies downgrades Pinterest to hold on slower growth prospects

Investing.com -- Jefferies downgraded Pinterest Inc (NYSE:PINS ) to "Hold" from "Buy" on concerns over growth and profitability amid shifting advertiser budgets, while lowering its price target for the social media platform to $32 from $40.

Jefferies highlighted three key factors for the downgrade, which are a slower adoption of new ad products like Performance+, waning margin expansion after two years of infrastructure cost optimization, and Pinterest's struggle to transition advertisers from experimental brand budgets to sustained "always-on" performance campaigns.

Jefferies expressed concern over Street estimates for mid-teens revenue growth in the first quarter of 2025, calling the projections overly optimistic. The firm is 4% below consensus on FY25 EBITDA.

Pinterest shares have fallen 22% year-to-date, trading at 12 times FY26 EBITDA, their lowest multiple since 2022. Jefferies believes this lower valuation is warranted, given the likelihood of downward revisions to growth expectations.

Despite some progress with direct response tools like Direct Links, Jefferies warned that Pinterest's efforts to drive sustained ad spending may take longer to materialize.

"Still waiting for a breakout," Jefferies analyst wrote. 

Source: Investing.com