Deutsche Bank Identifies Compelling Reasons to Make Pinterest a Core Investment

Deutsche Bank has started coverage of Pinterest with a Buy rating and a price target of $43, emphasizing the platform’s significant growth potential and its largely untapped user base.

Analysts at Deutsche Bank note Pinterest’s unique role as a “scaled, increasingly personalized ‘digital catalog'” that attracts affluent users who are likely to make purchases. They point out that 90% of product searches on Pinterest are unbranded, which presents advertisers with a unique opportunity to engage consumers before they finalize their product or brand choices.

The firm’s analysts highlight Pinterest’s ability to guide users throughout the entire purchasing process—from initial inspiration to the final purchase—as a critical asset for advertisers aiming for comprehensive marketing strategies. This, along with Pinterest’s efforts to expand into related categories, is predicted to fuel user growth further.

Deutsche Bank projects a compound annual growth rate (CAGR) of 6% in global monthly active users from fiscal years 2024 to 2026, with an optimistic scenario suggesting growth could reach 9%. Regarding revenue, the bank anticipates an 18% growth rate over the next three years, slightly surpassing market consensus, and an upside case that could result in a 25% CAGR.

Partnerships and third-party demand are expected to play a significant role in increasing international average revenue per user (ARPU), which in turn should enhance profit margins. Deutsche Bank forecasts an 11 percentage point expansion in Pinterest’s adjusted EBITDA margins during the forecast period, with a potential additional 3 percentage points in the upside scenario.

Given Pinterest’s robust growth prospects and margin improvement opportunities, analysts believe the company’s current valuation is appealing, especially in relation to its competitors. They assign a fiscal year 2026 EV/EBITDA multiple of 17x, which is below the average of 20x among peers, but suggest that Pinterest’s growth and margin attributes could justify a higher valuation multiple in the future.

In conclusion, Deutsche Bank sees a strong case for investors to consider Pinterest as a key holding, highlighting a clear path towards revenue and margin enhancements while noting its valuation is significantly lower than that of its competitors.