PacCrest's Confidence In LinkedIn Is 'Shaken,' But Thinks Selloff Is Overdone

• LinkedIn Corp LNKD shares have dropped 23.87 percent over the past three months, touching to a low of $188.03 on January 27.
• Evan Wilson of Pacific Crest has maintained an Overweight rating on the company, while lowering the price target from $280 to $190.
• Wilson stated that although the 4Q results were disappointing and the exit from Bizo had “shaken” the confidence in the company, the selloff in the stock was “overdone.”

Analyst Evan Wilson mentioned that LinkedIn’s 4Q revenue came in below the estimate, although Talent Solutions’ revenue was higher than estimated. Both Marketing Solutions and Premium Subscriptions missed the revenue estimates. However, the EBITDA of $249 million was higher than the estimate of $225 million.

Regarding the exit from Bizo, Wilson said that the company was making a “gigantic mistake stepping back on investment in its ad network. The value of its data to advertisers is well ahead of its inventory scale, but now it has less chance of truing up that divide.”

Now the only big opportunity for the company to increase data set monetization in the near term was Sales Navigator.

“If not for an epic sell-off and track record, we would turn more negative,” Wilson noted, while adding, “LinkedIn has rarely given investors a reason to own the stock in 1H and it has happened again.”

Wilson believes that the company would need to strive through the remainder of the year to restore confidence in a much more difficult environment.

The revenue and EBITDA estimates for 2016 have been reduced by $178 million and $49 million, respectively.