There's been a notable change in appetite for Pinterest, Inc. (NYSE:PINS) shares in the week since its yearly report, with the stock down 11% to US$25.88. Revenues were in line with expectations, at US$2.8b, while statutory losses ballooned to US$0.14 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Pinterest

Following the latest results, Pinterest's 26 analysts are now forecasting revenues of US$3.04b in 2023. This would be a solid 8.4% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 67% to US$0.047 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.21b and earnings per share (EPS) of US$0.041 in 2023. There looks to have been a significant drop in sentiment regarding Pinterest's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

There was no major change to the consensus price target of US$29.11, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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$39.00 per share, while the most bearish prices it at US$20.00. 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. It's pretty clear that there is an expectation that Pinterest's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 8.4% growth on an annualised basis. This is compared to a historical growth rate of 33% over the past five years. Compare this to the 140 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 9.3% per year. So it's pretty clear that, while Pinterest's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Pinterest to become unprofitable next year. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Pinterest going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Pinterest that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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