By Carly Forster
LinkedIn Corp (NYSE:LNKD) is a Mountain View, California based social networking website primarily used for business-oriented professional networking. The social media network released its third quarter financial report on Thursday October 30th and its results gave investors reason to celebrate. Correspondingly, LinkedIn’s stock price shot up 12% in trading on Friday.
In Its Q3 results, LinkedIn reported $0.52 earnings per share on a diluted Non-GAAP basis, beating analysts’ consensus of $0.47 by $0.05. During the same quarter of last year, LinkedIn posted $0.39 earnings per share. The company had revenue of $568.00 million for the quarter, compared to the consensus estimate of $557.50 million. LinkedIn’s quarterly revenue was up 45% on a year-over-year basis. Analysts expect that LinkedIn will post $1.87 EPS for the current fiscal year.
LinkedIn Corp (NYSE:LNKD)’s better than expected quarter is partly due to its strong growth in the Chinese market and the evolution of job ads as a fast-growing business line. In addition, LinkedIn saw a 28% increase in new subscribers totaling to 332 million memberships. 75% of its new members came from outside the United States. “LinkedIn made significant progress against several long-term strategic investments we began this year,” said Jeff Weiner, CEO of LinkedIn. “During the third quarter, we took meaningful steps in increasing the scale and relevance of job listings, growing the professional publishing platform, and expanding our member network in new geographies and demographics.”
Shares of LinkedIn opened at $224.24on Friday, October 31st. The social media service has a 1-year high of $239.17 and a 1-year low of $136.02. The stock’s daily moving average is $227.48 and it has a 50-day moving average of $205.61. The market cap for LinkedIn is $28.26 billion and its P/E ratio is not applicable.
On October 31st, Cantor Fitzgerald analyst Youssef Squali maintained a Buy rating for LinkedIn and raised his price target from $250 t0 $255. He noted, “We’re maintaining a BUY rating on the back of strong 3Q:14 results, with revenue/EBITDA exceeding consensus estimates by 2%/7%, respectively. While 4Q:14 guidance is likely conservative, steady improvement in member metrics, sustainable growth in corporate customers and ARPU, and new products (particularly Sales Navigator) should continue to drive outsized revenue growth/margin expansion over time.” Squali currently has a 76% success rate recommending stocks with a +28.5% average return per recommendation. He has rated LinkedIn 10 times, earning an 83% success rate recommending the stock.
Similarly on October 31st, RBC Capital analyst Mark Mahaney reiterated an Outperform rating on LinkedIn and raised his price target from $235 to $245. He explained, “1) Consistent Revenue Growth: 45%, 45%, 43% – those were the Q3 Y/Y growth rates for the Talent, Marketing & Subscriptions segments…nice consistency; 2) Strong Corporate Solutions Customer Adds – 2,200 net adds in Q3 vs. 1,700 in Q3:13…so LinkedIn Corp (NYSE:LNKD) still in Hunter – not Farmer – part of the S-Curve. And ARPU growth was a solid 5% Y/Y; 3) LNKD Announced Mid-Single-Digit Price Increase For Talent Solutions – will begin in January ’15…first increase since ’13…probable evidence of pricing power; & 4) Solid Overall User & Engagement Growth – Registered Members (28% Y/Y), Visiting Members (16% Y/Y), and Page Views (28% Y/Y)…the platform is becoming more valuable.” Mahaney currently has a 65% success rate recommending stocks with a +25.5% average return per recommendation. He has rated LinkedIn 9 times, earning an 80% success rate recommending the stock.
On average, the top analyst consensus for LinkedIn is Moderate Buy.
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Carly Forster writes about stock market news. She can be reached at [email protected]
