Q4 Preview: Could LinkedIn (LNKD) Post Another Blow Out Quarter? You Bet!

Shares of LinkedIn Corp. (NYSE: LNKD) are modestly higher Thursday heading into the social networker's fourth-quarter earnings report...just the third since it went public last year.

After the market closes, analysts are expecting LinkedIn to report earnings of 7 cents per share on revenue. For comparison, last quarter LinkedIn has earnings of 6 cents per share and revenue of $139.5 million. Oh, and LinkedIn has beating the previous two Street earnings estimates by an average of 340 percent...which is impressive.

Shares of the business social networking giant moved 19 percent lower in the quarter to $63.01 at the end of December. Shares are about 22 percent higher since then.

Investors could take a hint from Groupon's (Nasdaq: GRPN) quarterly report (bad) or from Monster Worldwide (NYSE: MWW) (almost as bad), but LinkedIn is different from both of those companies.

Overall, analysts are just about complacent-to-positive on LinkedIn, with 9 having a Hold rating on shares, 8 at Buy, and 1 with a Sell. The analyst price target average is $84, with a low of $70 and high of $93. Since its IPO, LinkedIn has traded within a range of $55.98 to $122.70.

Analyst Comments

• JPMorgan is looking for earnings of 6 cents per share and revenue of $162.4 million. The firm notes that recent underperformance in LinkedIn might stem from "multiple compression of high-valuation names, broader weakness among small- and mid-cap Internets, and increased liquidity around the follow-on and lock-up expiration."
  
  Hiring Solutions should grow 125 percent, Marketing Solutions up 83 percent, and Premium Subscription revs up 71 percent. Fourth-quarter EBITDA should be $21.8 million with a 13.4 percent margin. JPMorgan commented, "Our estimate for a sequential decline is due to increased investments in Sales and Marketing (acceleration in headcount growth), R&D (tech infrastructure), G&A (office expansion), and a seasonal mix shift towards field sales."
  
  Items to look for include comments on Southern Europe, increased headcount through Q4, and updates on engagement metrics and new products. Further, about 55 million shares will pass the lock-up period on February 15th, so any comment on that would be appropriate.
  
  
• Collins Stewart is modeling earnings of 6 cents per share and revenue of $162.13 million. Though Collins didn't give specific outlook into the quarter, it recently highlighted a few positives LinkedIn has going for it, including:
  • 131 members;
    
  • Only company providing passive recruiting scale with higher-quality candidates;
    
  • Has less than 1 percent share of the $85 billion recruiting market...plenty of room to grow;
    
  • Cost to employers is less than 0.5 percent of compensation over the life of an employment period;
    
  • There is a high-income demographic using the site;
    
  • EBITDA margins could expand to over 30 percent in the long-term, versus 16 percent currently; and
    
  • Improving U.S. employment picture could lead to further upside.
  Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out LinkedIn's past performance at Streetinsider's LinkedIn's Income Statement.

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