LinkedIn Catalysts Are Coming In 2016, Says JP Morgan

In a report published Thursday, JP Morgan analyst Doug Anmuth maintained an Overweight rating on LinkedIn Corp LNKD, with a $300 price target, after meeting the company's CEO and CFO.

LinkedIn's management was upbeat and confident about the company's current business lines and the future product set for both Talent Solutions' customers and members. The officials, however, acknowledged the near-term headwinds in Premium Display and the longer sales cycle for Sales Solutions.

LinkedIn indicated that the Talent metrics had firmed up well, since the Q1 sales changes to 60-70 percent of accounts.

"Talent is better positioned w/customers as it now segments across key criteria such as company size/employee base, hiring volume, & overall spend potential. Mgmt also believes upcoming product changes are the biggest in years & we believe key components could circle around better leveraging corporate customer & LNKD data, & improved search," Anmuth wrote.

In the report JP Morgan noted that LinkedIn's marketing could reaccelerate in 2016, with a deceleration in Premium Display and Sponsored Updates constituting a significant portion of the company's marketing revenues.

Recent product improvements and higher NPS were expected to drive the performance of the Sales Solutions segment, with large enterprise deals expected in 2H15/2016.

Although the company's EBITDA margins were expected to remain depressed in 2015, owning to the Lynda.com acquisition, they are expected to rebound in 2016, as LinkedIn derives greater leverage and profitability, Anmuth added.