Sterne CRT Jumps on the LinkedIn (LNKD) Bandwagon with Buy Rating and Nosebleed PT
Arvind Bhatia from Sterne Agee CRT is going from cold to hot on Linkedin (NASDAQ: LNKD). After having a Neutral rating he ups the stock to Buy amidst a gap up and bases his price target on a nosebleed Price to Sales multiple. This may be the beginning of the herd changing course as LinkedIn improves its monetization.
LNKD beat 3Q revenue and EBITDA expectations by 3% and 37%, respectively, driven by the strength in the core Talent Solutions business, which grew 46% y/y, though excluding the contribution from Lynda.com, it grew 34%, which was just improvement over 2Q’s 32%.
Members grew 20% y/y, unique visitors grew 11% and member page views grew 36% y/y. Mobile represented 55% of the activity during the quarter. China now has 13M members, up from 10M members reported last quarter.
The new app specifically developed for China, Chitu, seems to be getting good traction in that market.
Within Marketing Solutions, Sponsored Updated grew 100% y/y and represented 50% of the revenue from this segment.
Premium Display Ads revenue declined mid-30% is a less meaningful part of Marketing Solutions and represented about 15% of the mix.
Fourth quarter revenue guidance of $845-$850M is relatively in line with the Street but EBITDA guidance of $210M is above consensus of $196M.
Bhatia raised his rating to Buy from Neutral and established a 12-month target price of $300. Based on ~7.5x 2017 revenue and 29x our 2017 EBITDA estimate.