Shares of LinkedIn were trading lower by nearly 20 percent Friday morning after the company reported its first quarter results along with a disappointing outlook.
Here are how some of Wall Street’s top analysts reacted to the print.
Wunderlich: Lowering Estimates But Metrics Still “Healthy”
Analyst Blake Harper commented in a note that LinkedIn reported a “good” first quarter print but the lower than expected guidance was attributed to changes in foreign exchange rates, headwinds in marketing business with display ads and headwinds in Talent business from large customers deferring spending.
However, the analyst noted key metrics on the platform remain “healthy” while remaining in a “heavy” investment mode which will be worthwhile. In addition, key metrics including number of members, mobile visitors and corporate talent solution customers were all in line with expectations – reaffirming the “value of the platform.”
Shares remain Buy rated with a price target lowered to $260 from a previous $300.
Wedbush: Long-Term Fundamentals Unchanged, But Remaining On The Sidelines
Shyam Patil commented in a note that LinkedIn lowered its annual revenue and EBITDA guidance for the first time since 2011, but this does not change the company’s long-term fundamentals.
Patil continued that despite a lowered outlook, the long-term fundamental opportunity has not materially changed. However, the analyst suggested that investors wait on the sidelines to further evaluate the timing and materiality of some of the potential key future growth catalysts including Sales Navigator, Sponsored Updates, the Lynda.com acquisition and activity in China.
Shares remain Neutral rated with a price target lowered to $200 from a previous $260.
SunTrust Robinson: LinkedIn Expanding Its Market, Guidance Is “Conservative”
SunTrust Robinson Humphrey’s Bob Peck commented in a note that he “believes” the exit rate for 2015 and its ability to continue to innovate and address its “expanding” total addressable market (now $115 billion versus $50 billion at IPO) are “positives” for investors. The analyst added that execution on key initiatives will be the “primary area of focus” in the near term.
Peck said LinkedIn’s ongoing transition of its corporate structure and internal training has been completed. However, the education of the marketplace and execution across the sales cycle is ongoing and a driver of the “conservative” guidance.
Shares remain Buy rated with a price target lowered to $250 from a previous $275.
Credit Suisse: Poor Guidance Mostly Reflects ‘Transitory’ Issues
Stephen Ju commented in a note that LinkedIn’s poor guidance was attributed to foreign exchange, the Lynda.com acquisition, Display and a sales force reorganization. The analyst noted that three of the four factors are ultimately “transitory” while the deterioration of the display business is “not an unfixable problem.”
Ju said the growth drivers and underlying fundamentals have not changed and investors should consider the pullback in shares as an opportunity to average down or initiate a new position.
Shares remain Outperform rated with a price target lowered to $307 from a previous $331.
Brean Capital: Reality “ReLinked”
Sarah Hindlian commented in a note that LinkedIn’s guidance “brought our Sell thesis rapidly into play.”
According to Hindlian, the company’s core businesses are slowing and profitability eroding even before the “expensive” Lynda.com acquisition has had the opportunity to weigh on results.
The analyst also noted that “weaker” results were attributed to a large sales force reorganization and foreign exchange troubles, but she argued that the company is “scrambling” to buy growth and the reorganization is due to “product fatigue.”
Shares remain Sell rated with a price target lowered to $172 from a previous $208.
LinkedIn’s Armageddon And Wall Street’s Reaction by Jayson Derrick, Benzinga