Pinterest Included in RBC’s ‘Top 30 Global Ideas List’, Amazon Excluded

RBC Capital Markets has released its quarterly update to the “Top 30 Global Ideas List,” introducing eight new stocks, including Pinterest Inc, while removing seven others, among them Amazon.

The addition of Pinterest highlights the company’s strong growth potential, which is attributed to enhanced advertising relevance and conversion rates. This improvement is driven by initiatives like direct links and partnerships with third-party retail media.

RBC believes these changes are likely to significantly enhance the return on ad spend (ROAS), positioning Pinterest’s stock for a possible upward revaluation as its growth reaccelerates to approximately 20%. Importantly, the firm notes that Pinterest does not rely heavily on expanding its U.S. user base; even existing users have the potential to drive substantial growth through improved ad engagement.

While it remains uncertain whether these adjustments will positively impact monthly active users in the U.S., RBC suggests that Pinterest’s current user base is under-monetized. Therefore, the company may not need to significantly increase its U.S. user count to accelerate revenue and improve margins.

RBC has assigned an Outperform rating to Pinterest’s stock, with a price target of $48, indicating a potential upside of 48% from current levels.

Besides Pinterest, other stocks added to RBC’s list this quarter include American International Group, Cameco, Healthequity Inc, and Zalando SE.

On the flip side, Amazon, along with other notable companies like Chubb and Biogen, has been removed from the list. Amazon’s shares declined by 6.8% in the third quarter of 2024, underperforming RBC’s broader Top 30 list, which achieved a total return of 7.8% during the same period. Nonetheless, RBC analysts continue to see long-term value in Amazon, especially within its AWS division, despite its removal from the list in favor of more confident recommendations.

Additionally, American Homes 4 Rent, Marks and Spencer Group PLC, Restaurant Brands, and S&P Global Inc have also been taken off the list.