LinkedIn Corp (LNKD) Earnings Strong, But Valuation Even

LinkedIn Corp (NYSE:LNKD) shares took a dive in trading on Wednesday in spite of the company’s strong results on Tuesday. Most blame the social network’s conservative guidance for sending shares down more than 9%.

LinkedIn Corp (LNKD) Earnings Strong, But Valuation Even

Raymond James analyst Aaron Kessler maintained his Market Perform rating on LinkedIn Corp (NYSE:LNKD) after the company’s report because he felt that the valuation was fair. He remains positive on LinkedIn’s fundamentals and long-term growth potential, however.

LinkedIn’s results were strong…

The social network’s guidance for the December quarter was significantly below expectations. Revenues were $393 million, ahead of the company’s guidance of between $367 million and $373 million. Adjusted earnings were $92.8 million, also ahead of the guidance of between $81 million and $83 million.

Marketing Solutions revenue accelerated 38% year over year to $88.5 million, mostly because of the launch of Sponsored Updates. LinkedIn Corp (NYSE:LNKD) reported that 1,000 customers are now using the new offering. Premium Subscriptions revenues were $80 million, driven partially by Sales Navigator, which LinkedIn reported has risen about 2.5 times since last year. Also the social network reported solid mobile adoption, which increased 38% on unique mobile visitors.

… LinkedIn’s guidance, not so much

One negative noted by Kessler was net new adds for Talent Solutions, which were reported to be 1,745—lower than his estimate of 2,015.

The biggest negative in LinkedIn Corp (NYSE:LNKD)’s report was guidance. For the December quarter, the company said it expects revenues of between $415 million and $420 million. That’s lower than Kessler’s estimate of $448 million and consensus estimates of $439 million. Earnings guidance was between $98 million and $100 million, below his estimate of $114.2 million and consensus estimates of $109 million.

He believes guidance will be conservative, just as it has been in the past. LinkedIn management typically guides very conservatively so the company can beat expectations. The analyst left his full-year 2013 revenue estimate unchanged at $1.525 million but lowered his 2014 estimate slightly from $2.147 million to $2.132 million.

His full-year 2013 earnings per share estimate fell significantly from 28 cents per share to 19 cents per share. His estimate for next year dropped as well, falling from 33 cents per share to 17 cents per share.