LinkedIn Corp (LNKD) PT Cut By Baird Ahead Of Earnings

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LinkedIn Corp (NYSE:LNKD) will report its first quarter results on Thursday, May 1 after the market close. The stock is down more than 28% this year so far. The professional networking giant’s user base has surpassed 300 millions. Wall Street expects LinkedIn’s first quarter revenues to come at $466 million with 35 cents in earnings per share. The Mountain View, California-based company has exceeded expectations on both metrics over the last five quarters. The company had earned 45 cents on revenues of $324.7 million in the corresponding quarter last year.

Recent pullback makes LinkedIn more attractive

LinkedIn Corp (NYSE:LNKD)’s own guidance calls for $455-$460 million in revenues. Talking about the recent pullback in the stock, BGC Partners analyst Colin Gillis said in a research note that the pullback has little to do with LinkedIn’s business, and a lot more to do with the general pullback in momentum stocks. Anyway, Baird Equity Research analyst Mark S. Marcon has lowered his price target on LinkedIn from $247 to $165. Baird maintains its Neutral rating on the stock.

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Baird Equity Research noted that the recent pullback makes LinkedIn Corp (NYSE:LNKD) more attractive. But it’s still difficult to consider the stock “cheap” at 7.75x estimated revenue for 2014. LinkedIn has a unique competitive position with a sizable lead in the professional networking space. Its disruptive technology and competitive position have helped the company grow its revenue at more than 50% over the past 16 quarters. However, revenue growth is expected to decelerate in the first quarter to 43.70% from 72%.

LinkedIn still has tremendous growth opportunities

Marcon says that, despite its impressive growth in the past, LinkedIn Corp (NYSE:LNKD) still has tremendous growth opportunities in the long-run. Its Talent Solutions business, which accounts for about 55% of revenue, is rapidly gaining traction as alternative to the traditional candidate-sourcing technologies. Currently, 86 of the Fortune 100 companies are using LinkedIn’s flagship recruiting product.

Moreover, LinkedIn Corp (NYSE:LNKD) has attractive characteristics such as about 90% gross margins, low capital requirements, EBITDA margins in mid-20s and strong free cash flow.

LinkedIn Corp (NYSE:LNKD) shares rose 0.65% to $153.47 in pre-market trading Thursday.