LNKD Stock: This Could Send LinkedIn Corp Surging 79.5%

LNDK StockLinkedIn Corp (NYSE:LNKD) stock was hammered last month, as shares fell 40% in one day after the company reported disappointing guidance for 2016. But LinkedIn’s fourth-quarter results beat analyst estimates on revenue and earnings—so what went wrong? Investors focused on LinkedIn’s revenue guidance for 2016 instead, which the company said would be lower than expected due to weakness in Europe, the Middle East, Asia, and Africa.

Did the bad news warrant a massive 40% sell-off? Absolutely not. However, such an overdone sell-off, especially when the fundamentals of a company have not changed, can provide investors with an excellent opportunity to pick up shares.

Now one analyst thinks the sell-off has provided a great opportunity for investors to take a closer look at LNKD stock.

On Monday, Cantor Fitzgerald analyst Youseff Squali maintained a “Buy” rating on LinkedIn stock and set a price target of $210.00. Given that today’s share price for LNKD stock is $117.48, Squali’s price target implies an upside of 79.5%. (Source: “Near-Term Hiccups At LinkedIn Don’t Alter Long-Term Opportunity, Cantor Says,” Benzinga, March 7, 2015.)

Squali said that he believes the company’s differentiated product offerings, emerging opportunities, and addressable markets, along with its lower valuation, warrant a “Buy” rating on LNKD stock.

After an investor meeting, Squali also added the following: “1) the fundamentals and market opportunity for LNKD remain largely unchanged; 2) field sales growth remains healthy; and 3) deceleration is largely coming from online sales.” (Source: Ibid.) He also noted that he believes the slowdown in sales will be reversed with the revamped version of the company’s “Recruiter” product.

In the latest earnings call, LinkedIn CEO, Jeff Weiner, said that the “next-generation Recruiter is more intuitive and relevant, and…will increase a recruiter’s ability to find passive talent.” Weiner also said that in 2016, “we will begin our journey toward addressing long-tail hiring by making Recruiter simpler to use.” (Source: “LinkedIn Announces Fourth Quarter and Full Year 2015 Results,” LinkedIn Corp, February 4, 2016.)

Lastly, Squali pointed out the growth in LinkedIn’s talent solutions business segment as a catalyst for future growth.

Talent solutions, the largest division of LinkedIn’s revenue sources (it accounted for 62% in the latest quarter), grew 45% year-over-year in the latest quarter, but management forecast that this growth rate would be in the mid-20% range in 2016. (Source: Ibid.) This is a “problem” any other company would love to have.

The Bottom Line on LNKD Stock

Investor expectations were previously so high, that it’s no surprise LNKD stock took the beating it did on the slightest bit of bad news (which really isn’t so bad). But this has created an excellent opportunity for investors to consider picking up shares of LinkedIn, now that they are relatively cheap. With lots of growth still ahead and a stock price that’s been slashed to make it relatively cheap, LNKD stock just might be worth a second look.

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