Pinterest Analysts Highlight Margin Expansion Potential From Cost Management, Reasonable MAUs Post Mixed Q4

KeyBanc analyst Justin Patterson maintained Pinterest, Inc. PINS with an Overweight and raised the price target from $28 to $32.
Revenue of $877 million fell below the analyst's and Street estimates.
EBITDA of $196 million was above the analyst and Street's estimate.
MAUs of 450 million came in slightly below the analyst and Street estimates.
Like its mega-cap peers, Pinterest is hyper-focused on expense efficiency, likely to translate to at least ~800 bps Y/Y improvement in 2H23E EBITDA margin, with the potential for faster growth if revenue recovers faster.
With gross margin expansion a vital driver of this improvement, the analyst believes Pinterest screens have one of the more compelling incremental margin profiles in his coverage universe.
Credit Suisse analyst Stephen Ju maintained a Neutral and raised the price target from $25 to $26.
The 4Q22 revenue, Adjusted EBITDA, and MAUs were largely in-line with the analyst's expectations as content recommendations resonated well with users.
Pinterest posted its 2nd consecutive quarter of Q/Q MAU growth, with app users growing 1000bps faster than overall. With the latter representing 80% of both revenue and impressions, it is apparent that machine learning capabilities should continue to improve engagement despite macro challenges.
Shopping continues to be a focus, and Pinterest intends to integrate shoppable content across its highest volume surfaces, including home feed and search.
From a vertical perspective, CPG and SMBs saw the most significant headwinds while travel, auto, and finance strengthened during the quarter. On the cost side, hiring will slow in 2023 following an elevated investment in 2022.
Benchmark analyst Mark Zgutowicz maintained a Hold.
The analyst reduced' the 23E ARPU trajectory to sub +2% Y/Y (from +5%) aided by the announced aggressive opex reset.
The '23 share outperformance will only come from confidence in a sustainable ARPU trajectory, which the analyst view as now off the table.
While cost efficiencies should always be a priority, the analyst views management's '23 clear the decks opex strategy as a short-sighted means to achieve much-needed ~200 bps operating leverage.
In a tightened macro and competitive environment, particularly with a revitalized Amazon.com Inc AMZN encroachment on DTC brands, cutting meaningful branding and marketing on "early" growth initiatives will depress Pinterest's digital share.
Price Action: PINS shares traded lower by 5.06% at $26.48 on the last check Tuesday.

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