JPMorgan upgraded Pinterest to Overweight from Neutral with a price target of $40, up from $35. While Pinterest shares have outperformed year-to-date, they remain down 18% from the February market highs, the analyst tells investors in a research note.

Pinterest shares jumped 4% in premarket trading.

The firm believes the company has made solid progress across its 2023 investor day priorities to grow users and deepen engagement, improve monetization, and drive profitable growth.

JPMorgan says Pinterest is leveraging its full funnel advertising approach and automation capabilities to capture a greater share of ad spending among the next tranche of advertisers. Given the company’s solid execution, potential upside to estimates and “lukewarm market positioning,” the firm views the risk/reward on shares as favorable.