For most people, LinkedIn Corp. (NYSE: LKND) is best known as the businessperson’s social networking site. But look at the stock price and you’ll see it’s more than just resumes and recommendations.
Since February 7, the stock has climbed about 34%; it’s up 47% year-to-date and 86% over the last 12 months. With a lot of people still feeling burned by Facebook and with other social media companies floundering (see Zynga and Groupon) this may be the one shining star in an often volatile sector.
So what prompted the February run up? Incredible fourth quarter results. Revenues soared 81%, net income climbed by 40% year-over-year and its adjusted earnings per share came in 45% higher than what most analysts predicted. The company brings in cash a number of ways. Its B2B Talent Solutions offering, which helps businesses recruit staff and post jobs among other things, is a big revenue driver. Revenues for that product were up 90% year-over-year to $161 million. Its marketing services saw revenues increase 68% to $83.2 million and its premium subscription service, which lets users dig deeper into profiles, was up 79% to $59.4 million. A lot of experts point to this diverse lineup of money-making offerings as the key to their success.
However, the question investors are likely now asking themselves is whether or not this company’s stock can continue to climb.
According to Blake Harper at Wunderlich Securities the answer is a definite yes. On February 27, the company initiated coverage on LinkedIn with a buy, rating saying in a report, “We believe LinkedIn has become the marquee platform for companies and professionals to engage with each other and build brands… We view LinkedIn with a very large competitive moat around its platform given strong network effects, a highly visible revenue stream, and the ability to rapidly innovate with new products.”
It went on to say that while the stock is trading at a premium to peers, “we believe the growth opportunities and strong execution should enable more beat and raises throughout the year to drive the stock higher.”
JPMorgan analyst Douglas Anmuth has an overweight rating on the stock and recently met with the company’s CFO. After taking to the executive he wrote in a report that he believes the company is operating “extremely well and has significant room for growth ahead.”
While we may not see another massive bump in the stock price like we did in February, unlike some other social media sites, LinkedIn is growing users and revenues and that will surely keep its share price climbing. Harper thinks the company, which is trading at $168 a share now, could reach $195, while other analysts have set a target price of between $180 and $200.
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