LinkedIn (LNKD) Stock Slumping Today Despite Pacific Crest Price Target Hike

LinkedIn (LNKD) stock is down after Pacific Crest's price target raise to $295 from $275, while maintaining an 'outperform' rating.
By Krysta Michaelides ,

NEW YORK (TheStreet) -- LinkedIn (LNKD)  stock is down 0.59% to $265.56 in afternoon trading Tuesday despite Pacific Crest's price target raise to $295 from $275, while maintaining an "outperform" rating. 

"LinkedIn relaunched its marketing solutions product, expanding into off-site ads. The opportunity is underestimated; it is uniquely positioned to serve the business-to-business (B2B) online ad market. We remain buyers," analysts said.  

With the online professional network's new platform it can deliver ads from its 5,000 advertisers on 2,500 other business-focused sites, using its own unique data, the firm explained. 

"Armed with 347 million user's work histories, LinkedIn is in position to dominate online B2B targeting," Pacific Crest noted. 

LinkedIn's new marketing suite has four solutions: Onsite Display and Sponsored Updates, Sponsored InMail, Network Display, and Lead Accelerator, the firm said. 

Pacific Crest raised its Marketing Solutions estimate for 2016 to 30% growth from 21% growth.  

"Given the potential of Sales Navigator, off-LinkedIn advertising and strong momentum in the core business, we see a great opportunity for estimates and price targets to move higher over time" the firm said. 

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, solid stock price performance 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 18.5%. Since the same quarter one year prior, revenues rose by 43.9%. 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.
  • Compared to its closing price of one year ago, LNKD's share price has jumped by 29.17%, exceeding the performance of the broader market during that same time frame. Although LNKD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.41 is very high and demonstrates very strong liquidity.
  • 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 decreased by 20.8% when compared to the same quarter one year ago, dropping from $3.78 million to $3.00 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 Ratings Report
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