Axoim Sees More Upside For LinkedIn

Axiom initiated coverage on LinkedIn Corp (NYSE: LNKD) Friday with a Buy rating and $300 price target.

Analyst Victor Anthony felt that Sales Navigator had a "long runway" with less than 2 percent penetration and noted that it could generate $230 million in revenue for 2015.

Sponsored Updates was expected to drive Marketing Solutions revenue and "could exceed 50 percent of MS revenues within 6 quarters," according to Anthony. "In addition, increasing inventory sell-through (ad loads) and rolling Sponsored Updates out to other parts of the platform such as Pulse, Slide Share, and Publisher's Posts, should increase monetization."

Talent Solution was another area that was expected to "be driven by more spend from existing clients and new client growth, and growing their SMB footprint," in Anthony's view.

Over the longer term, China was seen as a growth opportunity with membership having doubled in one year from 4 million to 8 million currently.

Looking Into China

Regarding China's market, France-based competitor Viadeo, which had more than 25 million members in China, told the firm "that China is an ideal market not only for its large population, but because the low unemployment rate creates competition for talent, and the increasing number of graduates are competing for limited entry-level jobs."

Anthony commented that despite the company's investments, margins should expand.

For 1Q 2015, the firm estimated revenues of $638 million, Adjusted EBITDA of $162 million, margins of 25.5 percent and Adjusted EPS of $0.58. The Street expected Adjusted EPS of $0.57.

The analyst concluded that the share price should continue to increase in spite of the 90 percent run-up from lows in the shares over the past year.

Brean recently took a very different perspective on the stock.

LinkedIn recently traded at $262.39, up 0.7 percent.