Citigroup Raises LinkedIn Price Target

After LinkedIn Corp’s LNKD big earnings beat, Citigroup released a report updating its outlook for the company. The report included a price target hike for LinkedIn stock.

Blowout Numbers

Citi analysts were not the only ones that underestimated LinkedIn’s Q4 numbers, as the company significantly beat consensus estimates. The company’s Marketing Solutions segment was mostly responsible for the big beat, beating Citi’s forecasted earnings by 16 percent. Analysts believe the mistake they made was not fully appreciating the earnings boost that would result from the Bizo acquisition.

Digging Deeper

Citi was also pleasantly surprised by Sales Navigator accounting for 30 percent of Premium Subscriptions revenue.

Talent Solutions growth met estimates of 41 percent year-over-year growth and demonstrated record-low churn rates.

Sponsored Updates exhibited strong growth as well during the quarter.

LinkedIn’s Q4 EBITDA of $179 million beat Citi’s estimates by 8 percent, and margins were 100 basis points better than expected.

Outlook

Citi analysts revised their outlook for LinkedIn based on Q4 results. Analysts boosted their revenue estimates for 1Q15 from$639 million to $656 million. Citigroup lowered its EBITDA estimates for the quarter from $168 million to $166 million based on LinkedIn’s updated margins guidance. For the entire year, Citi is modeling revenue of $2.99 billion and EBITDA of $820 million, both above consensus. Analysts believe that Marketing Solutions will outperform consensus estimates this year.

Citi believes upside is already priced in. Citi maintained its Neutral rating on the stock, but raised its price target to $248.

Shares of LinkedIn traded recently at $267.32, up more than 12 percent.