01:26 PM EST, 11/08/2024 (MT Newswires) -- Pinterest ( PINS ) might need to accelerate growth as soon as the first quarter to meet Wall Street estimates, RBC Capital Markets said Friday.

Late Thursday, the image-sharing platform posted stronger-than-projected third-quarter results. The company expects fourth-quarter revenue to grow 15% to 17% on an annual basis, indicating a slowdown from an 18% jump reported for the just-ended three-month period.

Pinterest's ( PINS ) shares were down 17% in Friday afternoon trade. The stock has lost about 24% in value so far this year.

The company's latest print was a virtual replica of last quarter where a modest guide down "drove an outsized reaction, which feels overdone," RBC analyst Brad Erickson said in a note to clients. The deceleration implied in the outlook, along with potentially tougher comparisons in the first quarter "may look daunting to investors," Erickson wrote.

Pinterest's ( PINS ) guidance indicates growth in line with its multiyear compound annual growth rate, including contribution from third parties, which it will start to lap next year. Hence, the company might need to accelerate growth by 300 to 500 basis points as soon as the first quarter to match run-rate gains expected for Amazon.com ( AMZN ) and Alphabet's (GOOG, GOOGL) Google ( GOOG ) in order to meet the Street's projections, according to the note.

"The continued issue of value creation lagging value capture continues where we think investors' patience has grown thinner with management's anecdotes of performance improvement not yet translated to upside," Erickson said.

Although Pinterest's ( PINS ) results showed improvements to the platform, such as direct links to advertisers more than doubling clicks for the fourth straight quarter, it's still unclear how the company actually gets itself paid from its new ad platform initiatives, RBC said.

"While the company called out it is reaching 5% of total ad budgets with some of its largest advertisers and 10% of those customers' digital budgets, to us, management's pragmatism on characterizing new tools' adoption as a (multi-quarter) development screened somewhat tentative on getting paid for the added value with a broader portion of its customer base starting out 2025," Erickson wrote.

Pinterest ( PINS ) expects fourth-quarter adjusted operating expenses to grow 11% to 14% year over year. That, along with a third-quarter beat on earnings before interest, taxes, depreciation, and amortization, continues to highlight "how efficient the model is and how strong the upward torque could be in the event that revenue inflects," Erickson said.

RBC reiterated its outperform rating with a $48 price target on the Pinterest ( PINS ) stock. The company represents an "underappreciated ad platform improvement story that has yet to show itself," according to the note.

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