LinkedIn Corp (NYSE:LNKD) shares continued to rise in premarket trading after the company’s positive earnings report last night. The stock rose as much as 10 percent before opening bell this morning, and analysts at Canaccord Genuity have increased their price target for the stock.
LinkedIn PT raised at Canaccord Genuity
Analysts Michael Graham and Maria Ripps issued a report to investors on Thursday after the announcement of LinkedIn’s second quarter earnings. They increased their price target from $200 per share to $230 per share. They continue to rate the stock as a Buy and have raised their earnings per share and revenue estimates for this year and next.
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They increased their 2013 earnings per share estimate to $1.56 per share from $1.46 per share and their 2014 estimate from $2.20 to $2.32 per share. For revenue, they raised their 2013 estimate from $1.521 billion to $1.525 billion and their 2014 estimate from $2.087 billion to $2.115 billion.
The good and the bad in LinkedIn’s report
The analysts found both bullish and bearish arguments for LinkedIn Corp (NYSE:LNKD) in the company’s latest results. On the bullish side, they note that member growth reaccelerated to 37 percent while engagement also rose again. The social network’s unique visiting members grew 45 percent, while member page views rose 69 percent. The company’s Marketing Solutions revenue was $85 million, which was ahead of their $75 million estimate. Self-serve ad products was the primary driver of this greater than expected revenue.
On the bearish side, they note that LinkedIn Corp (NYSE:LNKD)’s third quarter revenue guidance was lower than their estimate. The company guided for between $367 million and $373 million, but their estimate is $396 million. Also the social network’s earnings before interest, taxes, depreciation and amortization was guided to be between $81 million and $83 million, compared to Canaccord Genuity’s estimate of $90 million. And finally, the implied 22 percent margin guidance represents about 230 basis points of deleverage in relation to the second quarter.
LinkedIn management posted a solid performance
In spite of these bearish concerns, Canaccord Genuity is bullish on LinkedIn Corp (NYSE:LNKD). They note that the decisions made by management two years ago to rewrite the network’s code base made it possible for the company to innovate and create new products rapidly. The result was much higher member engagement, which drove self-service ad sales up and enabled Marketing to outperform even though the company transitioned to the Sponsored Updates platform.
The analysts note that their $230 per share price target for LinkedIn Corp (NYSE:LNKD) is a premium valuation, but they believe it’s “warranted by the company’s large opportunity and strong strategic position.”