Microsoft-LinkedIn Deal Highlights Underlying M&A Trend In Internet Landscape

Brian Pitz of Jefferies downgraded LinkedIn Corp (NYSE: LNKD) to Hold from Buy owith a price target raised to $196 from a previous $180 following the company's decision to sell itself to Microsoft Corporation (NASDAQ: MSFT) for $196 per share.

According to Pitz, the acquisition enhances Microsoft's transition from a desktop software company to one that's a cloud-based computing services provider. The analyst added that given the $26.2 billion price tag on the deal, there is little chance of another company presenting a superior bid.

Pitz suggested the acquisition will also face "little regulatory issues."

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Pitz also noted Microsoft's acquisition "highlights the underlying M&A trend" within the internet sector. Specifically, LinkedIn's "unique position and reach" makes it a stand-out company among its peers.

"Following LinkedIn's 4Q15 earnings, we remained confident that despite winding down Lead Accelerator, LinkedIn was well positioned in fast growing Talent Solutions as well as encouraging growth from Sales Navigator," the analyst wrote.

Finally, Pitz suggested that M&A activity in the internet sector will continue to be a theme as buyers look to acquire peers with uniquely positioned platforms, 100 percent owned IP and a differentiated technology.