UBS upgrades Pinterest stock to Buy, cites confidence in execution under new CEO

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss UBS’s Buy upgrade on Pinterest stock.

Video Transcript

JULIE HYMAN: We're a few minutes from the opening bell. Let's take a look at some movers. You see Pinterest there. The shares getting a boost in premarket trading after UBS upgraded the stock from neutral to buy and cited more confidence in the likelihood of execution under the company's new CEO here and saying that the company is being pushed to unlock untapped advertising opportunities by that new management team.

BRAD SMITH: It's all about the ads. That's how they're going to create more margin-driven revenue here. They said that the advertisers tell us Pinterest is taking bolder steps and moving more rapidly under its new CEO, Bill Ready, which gives us more confidence in the likelihood of execution overall. That in the note to clients.

Pinterest, for what it's worth, I think the way that they're looking to make the platform more shoppable, how they're really integrating more advertisements-- at the end of the day, it'll come down to on what user base. But I think on the strategy to just make sure that they've got enough referral traffic that continues to come through and leveraging how often-- I, at least on my own anecdata, see Pinterest as the number one or two ranked option in Google search rankings. In just my preliminary searches, I think Pinterest is doing good from that perspective.

And the positive feedback from advertisers is, I think, solid enough for one of the key analysts here to really give the rest of the Street kind of the warning sign-- or not a warning sign but perhaps a vote of confidence--

JULIE HYMAN: Heads up.

BRAD SMITH: --moving forward from here. The heads up, yeah.

JULIE HYMAN: Yeah, it's interesting. He talks specifically about the amount that-- the opportunity here in dollar terms-- the analyst, I mean, at UBS-- saying that the company in particular is focusing on international and that a ramp up of international advertising could add $500 million to the company's revenue if it shows similar patterns that it has shown in new markets in the past. So that would obviously be significant for Pinterest. You know, so we'll be watching that to see if it actually-- if there is that execution that he is waiting for.

BRAD SMITH: Right. And getting more on-- at the same time that they're seeing more ad revenue come through, continuing to increase one metric that has been core to Pinterest since the moment that they went public, even prior to that, which is the average revenue per user. And internationally seeing more of a spend that actually goes their way as well. That's been key to them.

JULIE HYMAN: And one more fun thing. Bill Ready is going to be on with Brian Sozzi a 4:00 PM today. Sozz is out at Shop Talk in Las Vegas, which is a big consumer and retail conference, and he's going to be talking to him there. So we'll hear from the man himself what some of his plans are.

BRAD SMITH: There we go. Big conversation coming up.