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

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

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

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.

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.

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Vikas Shukla

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.