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Takeaway: LNKD doesn’t need much to produce upside to rebased 2015 estimates, especially following its considerable investment into its salesforce.


  1. NEW BEST IDEA LONG: We recently went long LNKD on 7/14.  The 1Q15 hiccup that led to a +20% gap down in the stock was largely due to a big salesforce investment into improving selling environment (accelerating macro tailwinds).  Management used the 1Q15 hiccup to rebase consensus expectations, which are now inline with guidance (vs. over) for the first time in over a year.  LNKD doesn’t need much to produce upside to 2015 estimates, especially given the aforementioned salesforce investment, which we see as a coiled spring.  See note below for more detail.
  2. 2Q15 = COILED SPRING: Mgmt gave themselves enough breathing room with the light 2Q guide.  Consensus concentrated their estimate reductions into its Marketing Solutions and Premium Subscription segments, making the swing factor its Talent Solution segment, which is where we are most bullish.  We’re expecting a 2Q15 beat and 2015 raise, with 3Q guidance coming in above consensus.  There is a small risk that 3Q guidance falls to impress for no other reason than mgmt conservatism, but we believe mgmt already played that card when it cut its full-year outlook after beating its 1Q15 guidance.  

LNKD: New Best Idea (Long)

07/14/15 08:00 AM EDT 

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See link above for incremental detail and analysis.  Let us know if you have any questions or would like to discuss further.

Hesham Shaaban, CFA