Needham & Company Cuts Price Target as LinkedIn's (LNKD) 4Q Revenue Beat is Overshadowed by Weak Guidance

Needham & Company maintained a Buy rating on LinkedIn (NYSE: LNKD), and cut the price target to $200.00 (from $300.00), following the company's 4Q earnings report. Non-GAAP EPS was $0.94, ahead of consensus of $0.78. Total revenue was reported at $862M, above expectations of $857M, decelerating slightly to 34% y/y growth from 37% in 3Q15. The primary revenue upside was driven by Learning and Development, as well as slight upside from Hiring and Marketing Solutions. However, investor focus seems to be squarely on the low 1Q16 and FY16 revenue guidance. Management provided 1Q16 revenue guidance of $820M, below consensus of $868M. Needham believes the lower than expected guidance is driven by a combination of overall conservatism, a negative impact from shutting down Lead Accelerator, as well as management’s conservative expectation on emerging markets.

Analyst Kerry Rice commented, "While LinkedIn reported higher-than-expected 4Q15 results across key metrics, investor focus seems to be squarely on the low 1Q16 and FY16 revenue guidance. Our FY16 revenue growth estimate decelerates to 23% from our previous estimate of 31%. Our EBITDA margin estimate expands modestly to 26.7% from 26.1%. We believe the lower than expected revenue guidance is a result of management conservatism, the $50M impact of shuttering Lead Accelerator, and expected overall macro weakness in EMEA and APAC. However, we believe our estimates could prove conservative due to: 1) LNKD’s core products remain healthy; 2) LNKD continues to have a strong product pipeline, including Lynda and Sales Solutions, the full potential of which we believe is yet to be realized; and 3) management continues to stay focused in terms of both execution and resource allocation."

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 $192.28 yesterday.

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