LinkedIn (LNKD) Gets Slammed on Guidance - Evercore ISI

Evercore ISI analyst, Ken Sena, noted that LinkedIn (NYSE: LNKD) guidance came in 1/3 lower than expectations. 2016 guidance for 21% revenue growth was 10 percentage points lower than consensus at 31%. Target price is cut to $155 from $245 and there is no change to the Hold rating.

Revenues of $862mm (34% y/y, 39% y/y x-FX) met our expectation and were 1% above consensus. Talent Solutions was similar at $535mm (44% y/y), but within Talent, Hiring ($487mm, 29% y/y) was just shy with Lynda ($49mm, 32% y/y) delivering the entirety of the beat coming in 13% ahead of expectations. Meanwhile, Adj. EBITDA margins expanded 100bps y/y and 200bps q/q to 29% ($249mm, 39% y/y), exceeding our estimate by 11%.

2016 revenue growth guidance of 21% fell beneath Street's 31% estimate with Talent Solutions indicated to be in the mid-20s (reflecting macro pressures in APAC and EMEA and a needed product iteration to better address SMBs in these areas). Meanwhile, its second largest segment, Marketing Solutions, seems poised to provide a drag based on its elimination of its Lead Accelerator / Bizo business (which will be phased out by the end of 2Q16) given its higher-than-expected level of investment needed to scale, casting a $50mm headwind.

Target falls to $155 (from $245), implying 32x ’17 adj. P/E, consistent with the reduced 30% growth estimate,.

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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