By Christiana Sciaudone
Investing.com -- Snapchat and Pinterest (NYSE:PINS) dropped after concerns that the companies are overvalued.
Bank of America (NYSE:BAC) downgraded the companies to neutral from buy, with price targets dropped to $67 from $87 and $78 from $94, respectively, StreetInsider reported.
Snapchat and Pinterest were both big pandemic winners, rising over 185% and more than 200%, respectively, in 2020. The firm said the companies are trading above historical averages on a price-to-sales ratio, and well above Facebook (NASDAQ:FB) when its revenues were growing above 50% and margins were expanding.
Analyst Justin Post said higher Treasury yields, expected at 2.15% at year-end, make multiple expansions from here less likely.
“We continue to see Snap (NYSE:SNAP) and Pinterest as strong secular growers, expect strong 1Q channel checks to aid stocks ahead of 1Q results, and anticipate acceleration in growth in 2Q, but we think investors may becoming increasingly concerned on tougher 2H comps, especially in context of a broader economy that should be accelerating,” Post said in a note, according to StreetInsider.
Snap is down 4% and Pinterest 1.9%.
At the same time, he upped Booking (NASDAQ:BKNG) to buy from hold expecting reopenings pushing it to outperform in the second quarter.
"These include companies that were most depressed in 2020, including Online travel (Booking), transportation (Uber (NYSE:UBER)) and underperforming stocks in eCommerce (RealReal (NASDAQ:REAL))," the analyst said. He set the price target for Booking at $2,950, which compares to the average of $2,495.78, according to data compiled by Investing.com.