Cannacord Reiterates BUY on LinkedIn ($LNKD)
Based on strong Q4 results, Michael Graham, the Cannacord analyst covering much of the tech/new media sector is reiterating his buy rating on LinkedIn. In addition to this reiteration, he is also raising his price target from $85 a share to $95 a share.
Guidance from LinkedIn is previewing a strong 2012 based on momentum from the fourth quarter results and underlying metrics. The biggest statement out of the early release this morning talks about the strength of the 3 different revenue streams for LinkedIn; Hiring Solutions, Marketing Solutions and Premium Subscriptions. Monetization is ramping much quicker than anticipated by this analyst based on previous reports and their public filing. Revenue expectations have been increased from $849M to $903M for 2012.
The first half of 2012 could provide a hit on certain margins due to a significant number of new hires in sales and revenue generating areas of the company. As with most ramp ups within sales organizations expenses will ramp faster than the associated revenue, however that is a short term trend that corrects itself. The price target is based on a 50X multiple to Cannacords 2016 EPS of $3.23, discounted at 11%.