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Evercore Lifts PT on LinkedIn (LNKD) to $200, Likens to Salesforce.com (CRM)

February 27, 2013 7:19 AM EST Send to a Friend
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Price: $171.78 +3.79%

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    29 Buy, 12 Hold, 0 Sell

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Evercore Partners raised its price target on Overweight-rated LinkedIn (NYSE: LNKD) from $160 to $200 on anticipated multiple expansion.

"The anticipation stems from work performed with our Enterprise Software team, led by Kirk Materne, where we compare LinkedIn's business to several higher-multiple software peers (e.g., Salesforce.com nearer its IPO, Workday, and ServiceNow)," analyst Ken Sena said. "We conclude that on the basis of business mix, revenue growth, gross margins, and OCF, LinkedIn is worthy of comparable value, which would argue further multiple expansion."

Sena notes that one year following Salesforce.com (NYSE: CRM) IPO in 2004, it traded at 12x revenues versus the current 10x for LNKD. Five years following, CRM traded at 6.5x revs. "The similarities between LNKD and CRM include a predominantly enterprise-facing business model, consistent high double-digit revenue growth, multiple customer segments, large addressable markets, high gross margin and operating cash flow leverage, and a clear data advantage, suggesting strong moat characteristic," the analyst said.

A theoretical 5 Year $280 per share price could be argued, according to Sena. "This assumes for LNKD a similar level of sustained multiple contraction over the next five years as CRM (-11%)," he said. "Nevertheless, while this analysis is largely theoretical, we do see it as indicative of potential further share price upside for LinkedIn."

For an analyst ratings summary and ratings history on LinkedIn click here. For more ratings news on LinkedIn click here.

Shares of LinkedIn closed at $157.77 yesterday.




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