SunTrust's Bob Peck Says LinkedIn Guidance is Conservative

SunTrust analyst Bob Peck was impressed with LinkedIn Corp’s LNKD Q3 earnings report, which beat handily on revenue, EBITDA and EPS. Following the report, SunTrust is raising its price target to $275, up 14.5% from the prior $240 target. LinkedIn remains a Buy.

Peck points to growth in China and 10x growth in job hosting, as well as LinkedIn’s use of its powerful data sets as highlights to the Q3 earnings. Looking for negatives, Peck says that LinkedIn’s margins are less predictable as seasonality could “create lumpiness in [future] quarters.” Also, LinkedIn is investing in sales force and other capex, which depressed free cash flow.

FY15 revenue will be at $2.94 billion with EPS of $2.97, says SunTrust. In FY16, revenue and EPS goes to $3.8 billion and $3.98.

LinkedIn is trading substantially higher in premarket, gaining more than 10% following yesterday’s 2.5% increase.