LinkedIn Shares Connecting With Bullish Investors

LinkedIn Corp LNKD stock has not fallen prey to some of the sector weakness seen in many of the high-beta names in the market recently. The stock is still working to set new highs, however, so it has not been "all clear" for the bulls just yet.

Can the company's fundamentals or the broader market strength lead LinkedIn shares to new highs?

What The Bulls See

• Very attractive estimated revenue growth of 34.10 percent.
• Strong estimated EPS growth of 19.9 percent.
• An immaculate balance sheet: $2.26 billion in cash equivalents vs. no debt and a current ratio of 3.67.

What The Bears See

• Very rich valuation metrics: A price-to-book ratio of 9.18, a price-to-sales ratio of 13.62, a market capitalization of 27.86 that eclipses the enterprise value of 25.60 and a PE in the 80s vs. estimated 2015 growth in revenues and EPS of 34.10 percent and 19.9 percent, respectively.
• Negative net profit margins and negative levered free cash flows.

The Technical Take

Technicians note that LinkedIn shares may be set for another leg higher after completing what appears to be an "abc" downside correction for wave "iv" on the chart. The projected upside for the anticipated up move (wave "v & 5" on the chart) will be $238.54 or so (based on wave "v" roughly matching wave "i" in magnitude). A close below $215.52 should trigger stops and may lead to a drop to $202.90; Longs should be careful if that level is threatened.