Nomura Explains Why LinkedIn Guidance Fell Below Expectations

On Friday, Nomura issued a company report on LinkedIn Corporation

after the company beat 4Q revenue and EPS expectations but offered 1Q16 guidance that was below consensus estimates. Currently, analysts rate LinkedIn as a Buy while lowering their price target from $235 to $180. Anthony DiClemente and Lee Horowitz, analysts at Nomura, wrote, "Though LinkedIn reported upside to 4Q revenue…, guidance proved more conservative than expected, sending the stock down sharply...We are hopeful that management erred on the side of conservatism, as it has done historically with its guidance; however, multiple headwinds to '16 force us to reduce our estimates...The stock is likely to remain under pressure in the near term, but we believe there may be an opportunity from here given our view that the longer-term structural outlook for LNKD remains intact." Analysts at Nomura highlighted 3 reasons why LinkedIn's guidance was below expectations: 1. Macroeconomic Weakness Analysts have noted that demand for LinkedIn's platform has slowed globally, particularly in the EMEA and APAC regions. 2. LinkedIn's TS self-serve business The company expects growth of this business to slow down to mid-single digit growth. 3. Deceleration of top line growth Nomura believes recent guidance implies deceleration of core growth rates in Hiring Solutions. With this in mind, LinkedIn's revenue growth potential may slow due to fewer longer term, innovative catalysts. Currently, LinkedIn is trading at $115.37, down 40 percent.