Argus: LinkedIn At Rock Bottom, Still Worth $190

• LinkedIn Corp LNKD shares plummeted 44 percent on February 5.
• Argus’ Joseph Bonner maintained a Buy rating for the company, while reducing the price target to $190.
• Bonner believes that LinkedIn is a growth stock and that the selloff appears overdone.

“The Street was sorely disappointed with the company’s 2016 guidance, sending LNKD down more than 43% following the release,” analyst Joseph Bonner mentioned. He added that although nine analysts had downgraded the stock from buy to neutral after the report, “we are not joining the rush to the exits.”

LinkedIn’s member growth and engagement remain robust and the company’s disappointing guidance was a result of a decision to “terminate an unpromising product in favor of more worthy projects,” Bonner wrote. He pointed out that this was a step taken by management to support long-term growth and investor value, and therefore the stock should not be punished for that.

The EPS estimate for 2016 has been reduced from $3.58 to $3.26, which is still above the management’s disappointing guidance of $3.05-$3.20. The analyst expects LinkedIn to continue to “innovate across product lines in order to increase ease of use, boost member engagement, and enhance the value of the site to members, recruiters, and advertisers.”

The Argus report noted that following the “bloodbath” after the company reported its guidance, LinkedIn’s stock valuation was at “pretty much rock-bottom.”