LNKD reports on Thursday. A preview:
What to expect from LinkedIn’s earnings
LinkedIn is expected to report solid user growth
By Caitlin Huston
MarketWatch
Published: Feb 4, 2015 10:59 a.m. ET
NEW YORK (MarketWatch) -- LinkedIn Corp., LNKD, -0.68% the online network for professionals, is expected to keep growing as it adds users and capitalizes on its marketing business.
The company will reports its fourth-quarter earnings after the market close Thursday.
LinkedIn makes money from three main segments: talent solutions (recruiters and companies pay to reach potential employees), advertisements and premium subscriptions to the site.
Here’s what to expect from the company’s fourth quarter earnings:
Earnings: Analysts are expecting average earnings per share of 53 cents, up from 39 cents a year ago, according to FactSet.
Revenue: LinkedIn is expected to report sales of $617 million for the quarter, compared with $447.2 million last year. Talent solutions are expected to bring in $366.2 million, while marketing is expected to generate $131.8 million in sales.
Stock Reaction: LinkedIn shares have lost 3.5% of their value in the last three months. The stock has gained about 8% in the last year, underperforming the S&P 500, which has gained about 12%.
The more than 30 analysts that cover the stock have an average overweight rating, according to FactSet, and an average price target of $249.85, or about 13% above its current trading level.
Goldman Sachs analysts on Tuesday raised their price target ton the stock to $280 from $250.
What to watch for: Youssef Squali of Cantor Fitzgerald expects to see strong user growth, forecasting a 21.1% bump to 335.3 million members. The company is poised to show growth in talent solutions, due to gains over offline and online competitors, and from its professional services segment, he said.
The company is expected to maintain growth in its marketing business, as it turns to sponsored newsfeed updates, he said.
Though LinkedIn’s first quarter guidance will likely be muted due to currency headwinds, analysts at Goldman Sachs see the stock rising 25% in 2015, largely due to its sales navigator, a tool for salespeople to find potential leads, and its mobile presence.
In October, LinkedIn said unique visitors on mobile grew at three times the pace of overall unique visitors. At the time, LinkedIn reported strong growth in membership, rising to 332 million from 313 million.
Wedbush analysts said they’ll be looking for clarity on the timing of the company’s new projects, such as the sales navigator, sponsored updates and operations in the Chinese market.
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