Barclays Disappointed With LinkedIn's Guidance, Recognizes Bumpy Outlook Generated By Macro Headwinds
- Having declined steadily over the last three months, LinkedIn Corp (NYSE: LNKD) shares are down 24 percent since November 5.
- Barclays’ Paul Vogel maintained an Overweight rating for the company, while reducing the price target from $265 to $205.
- Although the company reported robust quarterly results, its guidance was disappointing, Vogel stated.
LinkedIn reported solid quarterly figures, with revenue ahead of the high-end of guidance. EBITDA margins expanded 100 bps y/y to 28.8 percent, while non-GAAP operating margins improved 50bps to 19.2 percent.
Related Link: LinkedIn's Guidance Sends Stock Crashing More Than 25%
Analyst Paul Vogel mentioned, however, that the company’s guidance was “a very big disappointment.” LinkedIn guided to 2016 full-year revenue growth of 21 percent at the midpoint, significantly below the consensus and Barclays estimates.
Vogel added, “While there are a few one-time issues affecting reported growth, the shutting down of part of Bizo ($50 million) and more currency headwinds (200 bp), the guide of such a large deceleration is surprising to us.” The revenue and non-GAAP EPS estimates for 2016 has been reduced from $4.00B to $3.65B and from $4.11 to $3.11, respectively.
Although the Overweight rating has been maintained, the analyst pointed out that the stock may have a “bumpy ride” ahead, given “the macro outlook, the company's presence in hiring and jobs, and our belief that stocks without strong valuation support are at significant risk.” He added, however, that the long-term story at LinkedIn remained healthy and that the company has potential.
LinkedIn’s shares plummeted after the guidance was announced. While the move was “outsized,” it was not surprising, Vogel commented.
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