Oppenheimer analysts initiate coverage of Pinterest with an “Outperform” rating by Investing.com

Investing.com — Pinterest (NYSE: ) has the smallest daily active user base among social media companies, but the company has an “edge” stemming from engagement and advertising on the platform, according to analysts at Oppenheimer.

In a note to clients on Tuesday, analysts noted that Pinterest, which is known for its boards designed to spark ideas about everything from recipes to weddings, has the fastest-growing digital advertising offering outside of the Meta-owned platforms. Instagram (NASDAQ:) .

“Pinterest operates a global discovery platform with high-intent users looking for products and inspiration, lending itself well to direct response advertising. Relevant ads enhance the core user experience, such as magazines, driving a strong advertiser (ROI),” Oppenheimer. the analysts wrote.

They initiated coverage on the company with an “Outperform” rating and a $45 price target on the stock.

“Ads drive more engagement, which leads to more advertisers, better data, more users and higher ad prices. “More than half of users consider Pinterest a place to shop, and 96% of searches are unbranded (eg ‘red dress’ ) further indicating access to unique inventory,” Oppenheimer analysts said.

In July, Pinterest’s stock price fell about 15% after the company’s third-quarter earnings guidance missed Wall Street expectations. The company said it now expects to post sales of $885 million to $900 million in the period, below estimates of about $907 million.

However, Pinterest said it had 522 million monthly active users globally in the second quarter, beating analysts’ forecasts, while average quarterly revenue per person of $1.64 met estimates.

Speaking on a post-earnings call, CFO Julia Donnelly noted that “Pinterest’s more sophisticated advertisers continue to gravitate to the platform,” though she signaled that “broader headwinds” are affecting group ad spending of food and beverages.

Overall, however, Pinterest executives said the advertising market was “relatively stable” in the second quarter.