It’s been a sad week for Pinterest, Inc. (NYSE:PINS), who’ve watched their investment drop 20% to US$20.58 in the week since the company reported its third-quarter result. The results look positive overall; while revenues of US$280m were in line with analyst predictions, losses were 3.4% smaller than expected, with Pinterest losing US$0.23 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Following the latest results, Pinterest’s 20 analysts are now forecasting revenues of US$1.5b in 2020. This would be a sizeable 46% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.52 per share. Before this earnings announcement, analysts had been forecasting revenues of US$1.5b and losses of US$0.50 per share in 2020. While revenue forecasts have been revised downwards, analysts look to have become more optimistic on the company’s earnings power, given the to earnings per share forecasts.
The consensus price target fell 11% to US$29.52, with analysts clearly concerned about the company following the weaker revenue and earnings outlook. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Pinterest at US$40.00 per share, while the most bearish prices it at US$14.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that analysts are expecting a continuation of Pinterest’s historical trends, as next year’s forecast 46% revenue growth is roughly in line with 55% annual revenue growth over the past year. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 15% next year. So it’s pretty clear that Pinterest is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Pinterest’s prospects. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Pinterest’s future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Pinterest going out to 2023, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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