NEW YORK (TheStreet) -- Shares of LinkedIn (LNKD) are moving higher on Wednesday after receiving an upgrade from Topeka Capital. The firm upgraded the professional social network to "buy" from "hold," arguing that the company can both beat and raise its earnings and sales estimates. The investment firm maintained a 12-month price target of $230.
As for the longer-term, analyst Victor Anthony writes, "We see LinkedIn benefiting financially from investments in R&D, Sales Solutions, Sponsored content, and China. The current broader pullback in Internet stocks has impacted LinkedIn disproportionately, in our view."
By late morning, shares had added 2.6% to $173.41.
Separately, TheStreet Ratings team rates LINKEDIN CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LINKEDIN CORP (LNKD) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 67.1% when compared to the same quarter one year ago, falling from $11.51 million to $3.78 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The gross profit margin for LINKEDIN CORP is currently very high, coming in at 87.06%. Regardless of LNKD's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LNKD's net profit margin of 0.84% is significantly lower than the industry average.
- You can view the full analysis from the report here: LNKD Ratings Report