What happened

Shares of one-time social media upstart Pinterest (PINS 4.04%) -- which at one time sported a stock price more than twice the $29 and change it costs today -- are inching ever so slowly back toward their highs of yesteryear. As of 11:35 a.m. ET Tuesday, the company's stock is up a solid 2%.

You can thank the friendly analysts at Evercore ISI for that.

So what

In a note by StreetInsider this morning, investment bank Evercore laid out four main reasons why it's upgrading Pinterest stock to outperform and raising its price target to $41 -- the highest estimate currently on Wall Street.  

The first is digital ad spending. Evercore thinks this bottomed late last year and says the evidence that this spending has now stabilized is "clear." It's predicting spending will resume growing later in the second half of 2023.

Second, Evercore sees Pinterest becoming more efficient, improving both its customer experience and its ability to help advertisers convert advertising into sales.

Third, as a result, the analyst believes Pinterest will enjoy "significant" revenue growth over the coming six to 12 months including a 50% improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q4 2023 and 30% annualized growth thereafter.

Now what

In Evercore's estimation, this kind of a growth rate should encourage investors to "re-rate" Pinterest stock. Positing a valuation of 27x next year's projected EBITDA -- which seems modest if Evercore is correct and Pinterest can begin growing EBITDA at 30% per year -- the analyst suggests Evercore stock could enjoy gains of as much as 37% over the next 12 months. This is the fourth reason Evercore likes the stock, thinking it's undervalued.

But what if investors decide to value Pinterest on something other than EBITDA? After all, if you value Pinterest stock on the more common metric of price-to-earnings, its current multiple is 229 -- which seems rather pricey. Even if valued on free cash flow (FCF) -- which Pinterest generates in abundance -- the stock costs nearly 42x FCF. Relative to a 30% growth rate (which hasn't even happened yet), that doesn't necessarily make 42x FCF an obvious bargain.

Long story short, Evercore could be right about Pinterest, as long as investors are accommodative about choosing the metric Evercore likes to evaluate the stock. If they choose any other metric, however -- or if Pinterest fails to produce the growth the analyst is expecting -- Pinterest stock could still turn out to be a dud.