Market Overview

LinkedIn Has Been Flying Under The Radar

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One momentum stock that hasn't received too much attention lately is LinkedIn (NYSE: LNKD).

With all the media attention on other momentum stocks such as Twitter, Facebook, Tesla, Netflix and Priceline, LinkedIn has gained more than $60.00 since bottoming on July 10 at $153.13.

A good portion of the rally took place before its latest earnings release. The Street was leaning the right way into the announcement, as the issue had rallied from its July low to the $187.00 level by the end of the month.

Another Solid Earnings Beat

LinkedIn blew away analyst estimates on July 31 when it posted a $0.12 beat ($0.51 vs. $0.39), along with a revenue beat of $23 million ($534 million vs. $511.17 million). This marked the eighth consecutive beat on both fronts and its largest beat margin on EPS since Q1 of 2013 of $0.24.

Related Link: Can Facebook Continue To Rally?

LinkedIn added $16.00 during premarket and after-hours trading to open at the $196.00 area after closing at $180.64 the previous day. The rally continued during the regular session, as it breached the psychological resistance level at the $200.00 level to close at $201.78. After one dip under $200.00 the following day, LinkedIn resumed its rally and reached $218.64 in Thursday's session.

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Closing In On The February High

LinkedIn has traded higher in nine of the last trading sessions since its earning release; the one down day was a little more then $1.00 on August 6. As a result of this monster rally, LinkedIn is now trading at its highest level since it peaked at $225.00 in February. It still remains quite a distance from its all-time high of $257.56 made in September 2013.

The only negative from the trading action of the last few days has been the fairly tight ranges for the issue. In other words, the buyers are still out there buying, the sellers are more willing to let off stock at these elevated levels and has prevented the double-digit gains that took in the early stages of the rally.

Analyst's Take

Despite the earnings beat, analysts did not upgrade the issue. All five analysts that commented on the stock all maintained their ratings (Buys, Outperforms and Overweight), but increased their price targets. The Street high price target resides with Jefferies at $300, while the Street low rests with FBR Capital at $156.00.

The most recent comments came from Stifel on Wednesday, as the firm resumed coverage on the issue with a Buy rating and a $250.00 price target. Stifel's Scott Devitt cited the impressive results from its core business as the reason for the Buy recommendation.

What's Next?

Investors sitting on large gains from the recent rally or ones that are stuck holding the issue during its decline from all-time highs may want to focus on two things.

First of all, LinkedIn's string of 10 consecutive higher lows is unsustainable. By focusing on the highest low of the string, which right now stands at $215.00, a breach of that level may indicate sellers changing modes from selling into strength to selling into weakness. Once a momentum issue turns, several days or weeks of gains can be erased very quickly.

Using the February high of $225.00 as a target price allows the investor to sell into strength. If the rally begins to stall and LinkedIn is unable to reach that level over the next few sessions, it may indicate some profit-taking may be on the horizon.

Latest Ratings for LNKD

DateFirmActionFromTo
Nov 2014Monness Crespi HardtInitiates Coverage onBuy
Oct 2014Canaccord GenuityMaintainsBuy
Oct 2014CRT CapitalReiteratesBuy

View More Analyst Ratings for LNKD
View the Latest Analyst Ratings

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