BGC Raises LinkedIn Corp Price Target To $220

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LinkedIn Corp (NYSE:LNKD) is up again in trading today, temporarily passing $205 in intraday trading, following the big earnings beat last week that pushed its stock price from $180 to $200. Other analysts have already raised their estimates, and now BGC Financial analyst Colin W. Gillis is following suit, maintaining his Buy rating and increasing his price target from $195 to $220.

Non-GAAP EPS beats consensus estimates

“LinkedIn reported another strong quarter with revenue growth of 47% year-over-year (YoY), and 13% sequentially,” he writes. “The company continues to drive revenue leverage off its investments and generated adjusted EPS 12 cents ahead of consensus expectations. The company has exceeded consensus earnings every quarter since its public offering.”

He’s referring to LinkedIn Corp (NYSE:LNKD)’s adjusted diluted EPS of $0.50, up from $0.38 in 2Q13, which beat the $0.39 consensus estimate and Gillis’s estimate of $0.41. GAAP diluted EPS was a $0.01 loss for the second quarter, down slightly from the 2Q13 gain of $0.03. Even using the non-GAAP numbers, Gillis’s price target is about 115x 2014E EPS and 133x the Bloomberg consensus 2014E EPS.

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Revenue growth was strongest in LinkedIn Corp (NYSE:LNKD)’s talent solutions business, which was up 57% year-on-year and accounted for 60% of the company’s total revenues, but marketing solutions was also up 24.4% and premium subscriptions were up 44% year-on-year. Part of the reason Gillis is bullish on LinkedIn is because it has three distinct revenue streams, so even if one stalls the other two should be able to provide solid revenue growth. He also likes LinkedIn’s focus on acquisitions in the $100 million range, such as the $101 million acquisition of Bright Media Corp earlier this year.

LinkedIn membership passes 300 million, but page views dips

LinkedIn Corp (NYSE:LNKD) membership grew 31.5% year-on-year to 313 million and the number of unique visitors continued to grow, though page views fell from 26 billion in 1Q14 to 25 billion in 2Q14. This would be a bigger concern for Facebook Inc (NASDAQ:FB), which is primarily an advertising platform, but as Gillis mentions LinkedIn has other important revenue streams. It’s never really tried to compete with Facebook or Google+ on sheer scale and aims to bank on its professional, more upscale audience. Even so, a dip in page views when everything else is rising is something for investors to keep an eye on.

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