LinkedIn's Valuation 'Still Premium,' Says Citi

Citi maintained its Neutral rating on LinkedIn Corp LNKD shares, saying valuation is "still premium."

The online professional network posted first quarter EPS of $0.74 and revenue of $861 million – up 35 percent year-over-year - both beat the Street's consensus, by $0.14 and $32.53 million, correspondingly.

For the second quarter, the company guided revenue of $885 million to $890 million, on EPS of $0.74 to $0.77, above the Street's estimate of $0.71. For the full year, management envisions sales of $3.65 billion to $3.7 billion and EPS of $3.30 to $3.40, compared to a consensus of $3.67 billion and $3.19.

Analyst Mark May said the company only raised full-year guidance by $50 million, meaning that the revenue outlook for 2Q16-4Q16 was only increased by $9 million.

Though the analyst feels the company's 2Q and 2016 guidance ranges are "likely to prove conservative, we believe LNKD is still likely to exit 2016 at a growth rate in the high-teens or low-20% range."

But, May says he "don't view (growth rate) as particularly attractive for a company trading at 12x EV/CY17 EBITDA, 20x EV/CY17 FCF, 41x adj. P/E and that is projected to generate a GAAP EPS loss of $2.46 in CY17."

The analyst raised his 2016 EPS view to $3.62 from $2.86, and increased price target on the stock to $140 from $130. Street sees 2016 earnings of $3.19 a share.

Apart from valuation, May's Neutral/High Risk rating on the stock is due to the deceleration in its core Talent Solutions business and the uncertainties about its advertising growth and the potential for its enterprise Sales Solutions.

Shares of LinkedIn climbed 4.88 percent to $129.01.