LNKD may have had a great quarter, but the valuation is still an issue.
LinkedIn: After A Stellar Quarter, A Pair Of Analyst Downgrades
By ERIC SAVITZ
Forbes
Aug 5, 2011 9:37 am
There’s simply no denying that LinkedIn made a stellar debut yesterday in its first earnings report as a public company. For the second quarter, as my colleague Tomio Geron noted yesterday afternoon, the company posted revenue of $121 million and non-GAAP profits of 10 cents a share, beating the Street consensus forecast of $104.5 million and a loss of 4 cents. Revenue was up 120% from a year ago. Members were up 61% year over year to 115.8 million, unique visitors rose 83% and page views increased 80%.
But the Street is getting a little antsy about the company’s generous valuation, which is now in the neighborhood of $9 billion.
- Morgan Stanley analyst Scott Devitt this morning cut his rating on the stock to Equal Weight from Overweight on a valuation basis, noting that his base case valuation on the stock of $110 leaves little upside.
- Evercore Partners analyst Ken Sena reduced his rating to Underweight from Equal Weight, setting a $70 price target. He is concerned about both valuation and the coming expiration of lock-up agreements that affect 92% of the company’s outstanding shares.
There are other skeptics on the stock, as well.
- William Blair analyst Timothy McHugh picked up coverage of the stock with a Market Perform rating. “If we used a multiple of 7-9 times projected 2012 revenue for hiring solutions, 6 times for premium subscription, and 14-16 times for marketing solutions, shares would be worth $55-$80,” he writes. “Upside to our revenue estimates, which is very possible, could push this valuation range up a bit. However, the company’s valuation leaves no room for error, in our opinion, so we prefer to find a better entry point on the stock.”
- J.P. Morgan analyst Doug Anmuth upped his target on the stock to $98 from $85, but repeated his Neutral rating over valuation concerns.
Nonetheless, LNKD this morning is up $3.49, or 3.7%, to $99.01.
blogs.forbes.com |
