LinkedIn (LNKD) Stock Price Target Raised at MKM

LinkedIn’s (LNKD) stock price target was increased to $310 from $285 at MKM Partners.
By Amanda Gomez ,

NEW YORK (TheStreet) -- LinkedIn Corp.'s (LNKD) stock price target was increased to $310 from $285 at MKM Partners, which maintained a "buy" rating on the stock.

The company's hybrid business is a blend of social media network and recurring subscription model, which allows the company to have a premium valuation to other Internet stocks, but falling behind other subscription-based businesses, MKM said in an analysts note.

Nearly 75% of the LinkedIn's revenue is from recurring subscriptions, with 62% of total sales resulting from direct enterprise sales efforts.

"We believe LinkedIn is a unique asset and management continues to execute well in building strong monetization engines around it," analysts noted. "The core business continues to show strength into what is believed to be a large market opportunity."

LinkedIn stock is declining 1.49% to $250.94 in mid-morning trading on Tuesday.

Separately, TheStreet Ratings team rates LINKEDIN CORP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

We rate LINKEDIN CORP (LNKD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 15.1%. Since the same quarter one year prior, revenues rose by 37.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although LNKD's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.41, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 850.6% when compared to the same quarter one year ago, falling from -$4.26 million to -$40.52 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LINKEDIN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: LNKD

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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