Credit Suisse Cuts LinkedIn From $330 To $230

• LinkedIn Corp LNKD shares plunged 31 percent in after-market trading on February 4.
• Credit Suisse’s Stephen Ju maintained an Outperform rating for the company, while reducing the price target from $330 to $230.
• LinkedIn reported better-than-expected 4Q revenues, but guidance was significantly short of expectations, Ju stated.

LinkedIn reported its 4Q15 revenue at $861.9m, up 34 percent y/y, and ahead of the guidance of $845m-$850m. LinkedIn’s shares plummeted on account of the company’s disappointing 2016 revenue guidance, which implies a sharp deceleration, analyst Stephen Ju noted.

He added that the revenue guidance was impacted by “cross currents” in Marketing Solutions, which resulted from the closure of Bizo, which has an impact of about $50m, and continued deterioration in Premium Display, with an impact of approximately $50m.

The performance of Talent Solutions is expected to be impacted by currency headwinds as well as EMEA/APAC macro headwinds. A slowdown in online signups translates to an impact of about $100m, Ju noted.

The revenue and adj. EBITDA estimates for 2016 have been reduced from $3.83b to $3.57b and from $1.04b to $959m, respectively. The adj. EPS estimates for 2016, 2017 and 2018 have been reduced from $3.77 to $3.05, from $5.78 to $4.45 and from $8.09 to $6.08, respectively.

The analyst commented, “We are buyers of LNKD shares into the weakness,” while mentioning that the company continues to exhibit:

1. Strong corporate customer additions
2. Growing contribution from Sponsored Updates
3. Continued ramp of Sales Navigator
4. Accelerating user engagement