Wolfe Research has upgraded Pinterest (NYSE:PINS) to Outperform from Peer Perform, maintaining a $40 price target, citing easing macroeconomic pressures and ongoing improvements in the platform’s core business.

In a note to clients on Thursday, the firm said its more bullish outlook stems from a less daunting economic backdrop, notable enhancements in Pinterest’s product suite – particularly its Performance+ tools—and a valuation that looks attractive relative to industry peers.

“We’re lifting our rating to Outperform based on a combination of a muted macro overhang, consistent product-driven momentum – especially from Performance+, a promising third-party advertising opportunity, and a reasonable valuation,” the analysts wrote.

The upgrade marks a shift from Wolfe’s more cautious stance in March, when the firm flagged macro headwinds as a concern. However, with a new U.S.-China trade agreement in place and strong first-quarter earnings and guidance from Pinterest, Wolfe now believes those risks have receded.

Pinterest’s Performance+ advertising tools, in particular, are seen as key contributors to revenue growth. Wolfe cited internal data showing the product boosted ad impressions by nearly 28% and reduced cost-per-clicks by over 22% in test campaigns – delivering measurable value to advertisers.

The analysts also pointed to long-term potential in third-party ad partnerships, especially the recent tie-up with Amazon (NASDAQ:AMZN), which could diversify Pinterest’s monetization channels and expand its advertiser base.

From a valuation perspective, Wolfe noted that Pinterest is trading at approximately 13.5x estimated 2026 EBITDA – lower than peers like Snap or The Trade Desk (NASDAQ:TTD), offering what they believe to be a favorable risk/reward profile.

Overall, the upgrade underscores growing confidence in Pinterest’s trajectory as it continues to strengthen its advertising business and navigate macroeconomic headwinds with increasing resilience.