BGC Partners analyst and Director Colin W. Gillis maintains a Buy rating for LinkedIn Corp (NYSE:LNKD) given the diverse nature of its three revenue streams, the potential for its market capitalization and the value of capturing the economic graph.
Haiku: LinkedIn shares traded, up or down two percent or more 82 times.
We remain positive on shares of LinkedIn Corp (NYSE:LNKD) given the diverse nature of its three revenue streams, the potential for its market capitalization to continue to expand as it monetizes and grows its user base, and the value of capturing the economic graph. That said, we mention that LinkedIn remains a volatile stock and investors should be prepared for the stock to swing. To illustrate this point, we mention that shares of LinkedIn have traded up 2% or more 47 times over the last year. Countering this is that shares have also traded down 2% or more 35 times. This compares to the S&P index which has increased 2% or more only once in the last year, and declined 2% or more only thrice.
LinkedIn’s revenue growth is slowing
While we remain positive on LinkedIn Corp (NYSE:LNKD)’s ability to continue to build its revenue, and like the diversity of the revenue sources, we mention that revenue growth is slowing (although still remarkable) and the magnitude by which the company has been exceeding consensus estimates is shrinking. We maintain our BUY rating mention and mention that even though shares are below the 52-week high reached on September 11, 2013, the stock has produced a total 12-month return of over 72%.
Our net revenue estimate of $441.8M is growth of 12.4% sequentially and 45.5% YoY. This is above consensus estimates of $438.2M. Our adjusted EPS estimate of $0.45 compares to $0.35 in the prior year and $0.39 in the prior quarter. Consensus adjusted EPS is $0.38. We expect the company can continue to drive earnings leverage off its revenue base.
We estimate revenue of $251.8M (57%, 56.4% YoY) from Talent Solutions, $101.6M (23%, 22.1% YoY) from Marketing Solutions and $88.4M (20%, 48.7% YoY) from Premium Subscriptions.
We estimate revenue of $307M (69.5%, 45.5% YoY) from the Americas, $101.7M (23%, 45.5% YoY) from EMEA and $33.2M (7.5%, 45.5% YoY) from APAC.
We estimate revenue of $256.2M (58%, 43.7% YoY) from Field Sales and $185.5M (57%, 48.1% YoY) from Online Sales.
Guidance and growth
December quarter company guidance is revenue between $415-$420M, adjusted EBITDA of $98-$100M, depreciation and amortization of $43-$45M and stock-based compensation of $55-$57M.
LinkedIn’s balance sheet and cash flow
LinkedIn Corp (NYSE:LNKD) has $2.2B in cash ($19.94 / share) and no long-term debt as of September 30, 2013. The company generated $126M in cash from operations in Q313. We mildly increase our FY13 estimates and FY14 estimates, maintain our BUY rating and our price target of $250 on shares of LinkedIn.