Bob Peck Downgrades LinkedIn To Neutral, Shaves Target To $155

• LinkedIn Corp LNKD shares have been trending south in recent months, and are down 24 percent since November 5.
• SunTrust Robinson Humphrey’s Robert S. Peck downgraded the rating for the company from Buy to Neutral, while reducing the price target from $250 to $155.
• The company’s poor guidance for 1Q16 and 2016 indicate a change in its strategy and suggest continued weakness in shares, Peck stated.

LinkedIn reported better-than-expected 4Q results, while guiding to 1Q and 2016 revenues and EBITDA below the Street estimates. Although LinkedIn typically guides conservatively, the 2016 guidance indicates a change in its strategy around the “potential for certain products, greater investment and time needed for others and macro risk,” analyst Robert Peck noted.

LinkedIn’s plans to shut down Bizo, guidance of difficult add-ons and renewals in Talent Solutions and a dip in its sales growth and margin expansion are the main reasons for the change in the thesis, Peck commented.

The analyst attributed the recent weakness in LinkedIn’s shares to not only the poor outlook but also the lack of any concrete catalyst in 2016. He believes that Sales NAV and Learning will continue to ramp up through the year, but do not appear to be at “inflection” points.

“We acknowledge the potential for an upside surprise from strong execution, but given the backdrop and market multiple compression we feel the Neutral rating is valid,” Peck added.

The EBITDA estimates for 1Q16 and 2016 have been reduced from $195 million to $191 million and from $1 billion to $976 million, respectively.