Pinterest's (PINS) revenue growth of 17% in Q2 offers "greater conviction" in the company's prospects for meeting its goals over the next three to five years, Wedbush Securities said Friday in a report.

On Thursday, Pinterest reported Q2 revenue rose to $998.2 million, topping Wall Street's estimates of $974.9 million and highlighting the company's ability to scale advertising without compromising user engagement or monthly active user growth, Wedbush said.

Management guided Q3 revenue growth of 15% to 17%, or 170 basis points above Wall Street expectations at the midpoint, marking a conservative outlook given Pinterest's consistent track record of meeting or beating forecasts, Wedbush said.

"Importantly, we believe consensus estimates still do not appropriately capture potential upside from more recent initiatives to drive monetization and engagement," the report said.

Wedbush boosted estimates for Q3 revenue and monthly active users, while increasing the full-year revenue estimate 1% to $4.2 billion.

Wedbush increased its price target on Pinterest stock to $44 from $42 and maintained its outperform rating.

The decline in shares after Q2 results was unwarranted and "primarily driven by elevated investor sentiment leading into the print due to the strong results from other digital advertising peers," Wedbush said.

Pinterest shares fell 8% in Friday trading.

Price: 36.03, Change: -3.14, Percent Change: -8.02