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LNKD: Thoughts into the Print (2Q15)

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

KEY POINTS

  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 

[click here]

 

 

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

@HedgeyeInternet 

 

 


July 28, 2015

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BULLISH TRENDS

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BEARISH TRENDS

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AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR)

Takeaway: We're adding AHS to our short bench as a way to play the ACA Tailwind/ACA Headwind Theme. Dropping DGX to Long Bench.

  • AHS SHORT BENCH (NEW)
  • DGX CLOSING LONG, MOVING TO LONG BENCH (Link to Note)

ADDING AHS TO SHORT BENCH | ACA HEADWIND THEME

AHS is a nurse staffing company who's current sentiment rank is among the highest across our universe of companies (short signal) and may be a good candidate for our ACA Tailwind/ACA Headwind Theme.   The theme assumes that the ACA Tailwind, which brought with it a massive one-time expansion of insured medical consumers, will mean revert in terms of enrollment growth and per member spending.  Our ACA Tracker looks at monthly data which currently shows slowing enrollment and flattening per enrollee spending which is significantly elevated compared to pre-ACA levels.  AHS has done well as the marginal supplier of nurse staffing while the ACA drove demand across the Healthcare landscape, including HCA and other hospitals where volume growth is at multi-year highs.  We expect the ACA Headwind will emerge as early as 2H15 and carry into 2016 as new enrollment and pent-up demand work through the medical delivery system.  Below are specific monthly time series which we'll use to track AHS business trends as we build out the work on AHS and while monitoring our ACA Tracker for deceleration.

 

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 Position Monitor

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 AHS Health Care Employment

AHS | ADDING TO SHORT BENCH (UPDATED POSITION MONITOR) - 2015 07 27 AHS Jolts

 


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.

The Macro Show Replay | July 28, 2015

 


Replay | Q&A with Hedgeye Healthcare Sector Head Tom Tobin

ARE you a healthcare investor? you can't afford to miss this call... 

 

Earlier today Healthcare Sector Head Tom Tobin and Healthcare Analyst Andrew Freedman discussed new developments to their Best Ideas and shared updated analysis.

 

A few of their Best Ideas report this week including CPSI (Best Idea short), HOLX (Best Idea long), and ZBH (Best Idea short). They also touched on ATHN and answered questions from viewers. 

 


Cartoon of the Day: Inflation?

Cartoon of the Day: Inflation? - Inflation cartoon 07.27.2015

 

***Below is a brief excerpt from this morning's Early Look by Hedgeye CEO Keith McCullough.

 

...Uh, maybe we should be long, “decoupling”? Nope. We’ll stick with the #Quad4 asset allocations, which should have you long low-beta and yield chasing sectors (short Commodities). Currently I like Healthcare (XLV), REITS (VNQ), and Utilities (XLU); not the following:

 

  1. Inflation expectations (5yr breakevens) dropped another -13bps = down -28 bps in the last month (1.42%)
  2. Energy (XLE) and Basic Material (XLB) stocks down -4.0% and -5.4% (-9.1-9.3% in the last month) respectively
  3. Industrial stocks (XLI) deflated another -3.7% to -6.5% YTD (down -4.5% month-over-month)

 

If you’re levered long to inflation expectations another way to look at your risk... 


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

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