NEW YORK (TheStreet) -- LinkedIn (LNKD) stock is increasing by 0.25% to $221.22 in mid-morning trading on Tuesday, after MKM Partners initiated coverage on the company with a "buy" rating and $285 price target.
LinkedIn offers a variety of products and vast market opportunities, MKM said in an analysts note.
The company's Talent Solutions products can access $27 billion of the $85 billion staffing and recruiting market, while Lynda.com has the potential to gain traction in a $30 billion market for online learning.
The Marketing Solutions segment has the opportunity to be well positioned in the $45 billion digital advertising market, according to analysts.
LinkedIn's stock is expected to perform well, despite its second quarter results, since the stock is lower than the year-to-date high by 19%, analysts added.
The company will report its 2015 second quarter earnings results on July 30 after the market close.
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 5.4%. Since the same quarter one year prior, revenues rose by 34.8%. 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 30.45%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite currently having a low debt-to-equity ratio of 0.32, 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 4.51 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 significantly decreased by 216.4% when compared to the same quarter one year ago, falling from -$13.45 million to -$42.55 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