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Morgan Stanley Reiterates On LinkedIn, Noting Premium Multiple

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In a report published Friday, Morgan Stanley analyst John Egbert reiterated an Overweight rating on LinkedIn (NYSE: LNKD) and lowered the price target from $250.00 to $240.00 following first quarter 2014 results.

Summary of Earnings and Guidance

  • LinkedIn reported first quarter EPS of $0.38 versus the estimated $0.34.
  • Net loss was $13.4 million for the quarter compared with $22.6 million for the same quarter a year ago.
  • Non-GAAP net income was $47.3 million, compared to $52.4 million for the first quarter of 2013.
  • Second quarter revenue is expected to be within $500- $505 million.
  • The company sees adjusted EBITDA for 2Q14 to be in $118- $120 million range.
  • Revenue for the full year is expected to be within $2.06 billion and $2.08 billion.
  • LinkedIn sees adjusted EBITDA for FY14 to be in $505- $510 million range.

Morgan Stanley Sees LinkedIn Yielding Premium Multiple

Egbert reported that LinkedIn is the leading professional social network. The analyst noted that the company's Hiring Solutions products are “disruptive to online jobs markets” and emphasized the strength of the barriers to entry. Morgan Stanley sees three opportunities for LinkedIn including, “1. Oversubscribed on self-service advertising inventory 2. Expansion into content marketing could improve engagement 3. Under-penetrated internationally.”

The analyst raised second quarter and full year revenue from $503 million and $2.10 billion to $511 million and $2.12 billion, respectively. Morgan Stanley lowered adjusted EBITDA forecasts from $127 million and $547 million to $125 million and $530 million, respectively, to account for addition reinvestments by LinkedIn. The lowered price target reflects a more gradual margin ramp.

Shares of LinkedIn closed at $161.22 on Thursday, up 5.05 percent for the day. The stock is currently down 2.31 percent in pre-market trading.

Latest Ratings for LNKD

DateFirmActionFromTo
Jul 2016CitigroupMaintainsNeutral
Jun 2016UBSDowngradesBuyNeutral
Jun 2016RBC CapitalDowngradesOutperformSector Perform

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Posted-In: John Egbert Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings

 

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