KeyBanc lowers Pinterest stock price target to $25 on Europe woes

KeyBanc has reduced its price target for Pinterest Inc (NYSE:PINS) from $28 to $25, while keeping an Overweight rating on the stock. This decision comes after Pinterest's third-quarter results fell short of both KeyBanc's and Wall Street's expectations, primarily due to larger-than-anticipated headwinds from Europe. The stock has experienced a decline of 8.8% over the past week and a 25% drop year-to-date, currently trading at $19.36.

KeyBanc expects Pinterest to achieve low-double-digit percentage growth in 2027 and 2028. However, the firm identifies product innovation as a potential source of optimism. According to InvestingPro analysis, Pinterest appears to be undervalued at its current price point, with the platform's Fair Value suggesting significant upside potential.

KeyBanc has stated that it will only consider Pinterest a worthwhile investment if the company achieves consecutive beat-and-raise quarters to demonstrate its ability to execute against macro pressures.

The new price target of $25 reflects a valuation of 7.5 times Pinterest's estimated enterprise value to EBITDA in 2028. Investors seeking a more in-depth analysis of Pinterest's valuation and growth prospects can refer to the comprehensive Pro Research Report available for this and 1,400+ other US equities on InvestingPro.

In recent news, Pinterest has faced multiple price target reductions from various analyst firms following its underwhelming third-quarter performance. Cantor Fitzgerald noted that Pinterest's revenue fell short of Street estimates by 3% due to reduced spending by cross-border advertisers. Guggenheim similarly expressed concerns, stating that Pinterest's revenue growth of 12% fell short of expectations, largely due to the end of the EU de minimis exemption.

StoneX attributed the revenue deceleration to global challenges, including changes in Europe's policies affecting cross-border advertisers. RBC Capital and Bernstein both lowered their price targets to $22, citing similar challenges in Europe and monetization issues.

Despite these challenges, some firms, such as StoneX and Cantor Fitzgerald, have maintained positive ratings for Pinterest, with StoneX holding a Buy rating and Cantor Fitzgerald maintaining an Overweight rating. These developments highlight the difficulties Pinterest faces in the global market, particularly concerning advertising revenue and international operations.