RBC Endorses LinkedIn, Sees 20% Upside

While LinkedIn Corp LNKD shares are meaningfully off their recent lows, the stock has declined 41 percent year to date and is currently trading at a “reasonably attractive” valuation.

RBC Capital’s Mark S. Mahaney upgraded the rating on the company from Sector Perform to Outperform, with a price target of $160, which implies 20 percent upside.

The stock is, however, still amidst correction, driven by the guidance of significant growth deceleration in FY16.

What The RBC Survey Says

“Online Recruitment survey work + updated Marketing Solutions market analysis makes us view LNKD as still well positioned against several large TAMs,” Mahaney mentioned.

RBC Capital’s 4th Online Recruitment Survey, conducted on 290 recruiting professionals in the U.S., confirmed LinkedIn’s value proposition and strong competitive positioning.

The survey also showed that the company’s customers were planning to increase spend, with 45 percent indicating an intension to raise spending over the next 12 months.

In addition, LinkedIn customers generally expressed greater satisfaction that customers of other recruiters, with 78 percent saying that they were “Completely,” “Extremely” or “Very” satisfied.

In fact, Mahaney pointed out that LinkedIn had the highest satisfaction amongst its competitors.

Other Areas

“Comparing the Unique Visitor and Minutes growth of LNKD to other leading recruiting/ career-focused Online platforms, it is clear LNKD has a healthy and widening lead over competitors,” according to the RBC Capital report.

Mahaney believes that the Marketing Solutions business has robust growth opportunity ahead, driven by the monetization gap and transition to sponsored content. The new mobile app is also expected to drive higher engagement.

“Since the launch of LNKD's flagship new Mobile app in Q4:15, LNKD has seen rising engagement. Higher engagement offers the potential to drive more advertiser $’s,” the analyst added.