What happened
Shares of the image-sharing platform Pinterest (PINS 0.89%) popped today after an analyst upgraded the company's stock to a buy rating.
Investors jumped on the news and sent the social media stock up 3.6% as of 10:48 a.m. ET.
So what
Goldman Sachs analyst Eric Sheridan upgraded Pinterest to a buy rating from the previous neutral rating and gave it a price target of $31, up from $24.
Image source: Pinterest.
Sheridan said that while the online advertising market is "mired in uncertain times," he's still bullish on Pinterest, and he wrote in an investor note that the company is "positively levered to a number of long-term secular growth themes (engagement & ad spend shifting online, social commerce, creator economy, etc.)."
The analyst thinks Pinterest can tap into several opportunities to boost the company's average revenue per user, including improving its international monetization and ad sales from Pinterest's "catalog pins" feature.
This optimism from Sheridan comes just a few days after Piper Sandler analyst Thomas Champion raised Pinterest's price target to $23, up slightly from $22, while keeping a neutral rating on its shares.
Now what
Pinterest's share price is down 49% over the past year, but the recent stock upgrade by Sheridan and investors' response to it show that there's still plenty of optimism surrounding the company.
The broader market is likely to continue experiencing volatility as the Federal Reserve hikes interest rates to tame sky-high inflation, but long-term investors may be wise to look past the near-term instability and focus on Pinterest's long-term potential.
