Macquarie Says 'Another Product Surprise Overshadows Healthy Core'

• Shares of LinkedIn Corp LNKD have lost 24 percent since November 5.
• Macquarie’s Tom White maintained an Outperform rating for the company, while reducing the price target from $260 to $225.
• The positive trends in the company’s business are likely to be overshadowed by its plans to exit Bizo and cease disclosure of enterprise customer count, White stated.

LinkedIn reported healthy 4Q results, with revenues and EBITDA ahead of expectations. The company’s $862 million revenues were up 34 percent y/y, or 39 percent FX-neutral.

LinkedIn guided to 2016 revenues of $3,600-$3,650 million, up 21 percent y/y at midpoint, versus 35 percent growth in 2015. The company projected 1Q16 revenue growth of 29 percent, and indicated a slowdown over the next three quarters due to a $50 million drag from its planned exit of the Bizo business and forex headwinds.

Analyst Tom White mentioned that the company’s 2016 guidance was disappointing, with forecasted revenue growth impacted by “slowing Talent Solution’s self-service revenue, macro pressure in EMEA/APAC exiting 4Q, and some inorganic/self-inflicted factors (FX, exiting Bizo.)”

Apart from showing some conservatism, LinkedIn’s guidance includes some negative surprises including the company’s plan to exit the Bizo business and cease disclosing its enterprise customer count. Although the rationale for the two moves is clear, they “overshadow” the encouraging trends in the company’s business and outlook, White pointed out.