This company beat earnings estimates by 12 cents, and analysts’ forecasts are rising.
LinkedIn (LNKD)
from Cabot Market Letter Updated from Investment Digest 742, May 8, 2013
We were super-bullish on LinkedIn (LNKD) when we bought the stock back in 2012. Its business was revolutionizing the recruiting world, and it was also creating a professional social network (and all the advertising opportunities that go along with that). And the stock did do well for us after it blasted off in February 2013, but the advance ended after management began spending heavily, cutting into earnings growth.
That spending spree—mainly to switch to a sponsored advertising model, like Facebook, but also to enhance various other tools—took about a year, but it’s now bearing fruit. In the second quarter, all three of the firm’s business segments (recruiting, advertising and premium subscriptions) rose at least 44%, while earnings were up 34% and cash flow soared 69%. Analysts believe the earnings slowdown is a thing of the past; the bottom line is projected to rise 47% in 2015 and north of 40% in the years that follow!
Most important, institutional investors are beginning to buy into the re-acceleration story. LNKD fell 47% over eight months, but found support in the 150 range and, a month ago, gapped higher on earnings and has been running since. It still has lots of old resistance to chew through, but we think it’s turned the corner and are adding it to the Model Portfolio. BUY.
Michael Cintolo, Cabot Market Letter, www.cabot.net, 978-745-5532, August 20, 2014