Two Sides Of The Sell-Side Spectrum: LinkedIn Ahead Of Earnings

LinkedIn Corp LNKD is scheduled to report its second quarter results on Thursday after market close. In a bear versus bull battle ahead of the print, analysts at Brean Capital reiterated a Sell rating and expressed caution over the quarterly print while analysts at Cantor Fitzgerald are expecting solid quarterly results.

Brean Capital: Upside To Q2 Estimates Still Implies A Deceleration

Sarah Hindlian of Brean Capital commented in a note that even if LinkedIn reports a "substantial" upside to consensus estimates in the second quarter, it will still mark a "steep" deceleration. The analyst said that a 3 percent beat (a figure in-line with the 10 quarter average beat) on an already "lowered bar" implies a nearly 14 percent deceleration from levels seen in fiscal 2014.

Finally, Hindlian argued that LinkedIn's valuation reflects a "cognitive dissonance" as it is 44 percent more expensive than Facebook Inc FB on a fiscal 2016 EV/EBITDA multiple (26.5 times versus Facebook's 18.4 times), despite the fact that Facebook's fiscal 2016 growth expectations are 10 percent above those of LinkedIn.

Shares remain Sell rated with an unchanged $172 price target.

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Cantor Fitzgerald: Continued Business Momentum

Youssef Squali of Cantor Fitzgerald commented in a note that he is expecting LinkedIn to post "solid" results in its second quarter print, driven by "continued business momentum."

Squali added that LinkedIn's Talent Solutions segment should demonstrate the fastest growth rate (30 percent year-over-year) as it gained market share gains from both offline and online players. The company's Marketing Solutions segment revenue is expected to show a 19.4 percent year-over-year growth rate, reflecting strong momentum from sponsored updates.

Finally, Sales Navigator is expected to continue driving Premium revenue growth with Premium Subscriptions revenue expected to show a 23.2 percent year-over-year growth.

However, with a 40 percent international exposure, Squali suggested that LinkedIn's third quarter guidance will likely be "muted."

Shares remain Buy rated with an unchanged $245 price target.