An improving advertising landscape should help Pinterest , Piper Sandler said Tuesday. Analyst Thomas Champion upgraded the social media stock to overweight from neutral and hiked his price target to $30 from $25. The new target reflects a 27% upside from Monday's close. The stock gained 3.7% in premarket trading. It has lost 35.1% this year. "We like the new leadership, investor activism, and we see a buyback coming," Champion said in a Tuesday note to clients. "The lows are likely already in." In 2022, Pinterest margins were reset lower as management looked to video and shopping content. But Champion said the company is now exiting a peak investment cycle that should give way to margin growth next year. Pinterest is the only platform in Piper Sandler's survey of advertisers to show improvements in return on investment, targeting and measurement. Champion said that could mean a greater share of advertising spend in 2023, which would challenge a trend of contracting advertising revenue seen within technology companies. The company is also increasing users and demographic diversity. It added 3 million monthly active users in Canada after five quarters of declines, with the positive trend expected to continue in the next quarter. In the U.S., monthly active users should grow 5% in November, a similar jump as October but an acceleration when both are compared with September. Pinterest already captures a higher-income demographic with commercial intent, he said. But there's now a new record high of teen usage as well, which was previously considered a smaller market for the platform. Champion said margins at the company should expand in the fourth quarter with the reduction in force and hiring appearing halted. Wall Street expectations look attainable for revenue and margin expansion, he said, and a stock buyback is likely. — CNBC's Michael Bloom contributed to this report.