Thursday, January 12, 2012

LinkedIn: Is Global Competition A Growing Concern?

Shares of?LinkedIn (LNKD) are moving higher this morning, showing a slight uptick after Collins Stewart initiated coverage of the online professional social networking operator with a recommendation to buy the stock.

The firm’s analysts pointed out the LNKD was “the only company providing passive recruiting at scale,” referring to the site’s ability to grow with its audience. They believe LinkedIn has plenty of room to grow as it has penetrated less than 1% of the $85 billion talent-acquisition market. The social networker has also shown an ability to raise prices without affecting volume, added Collins Stewart.

The investment bank admitted, though, that LNKD’s valuation at 62 times projected 2013 earnings leaves “little room for error.”

LinkedIn went public on May 19th?at a price of $45, soared?over 100% on their first day, and then?received favorable reviews from the underwriters, including JP Morgan.

Earlier this month,?JP Morgan��s Doug Anmuth raised his rating on the sharesto Overweight from Neutral. That came after he had?cut his rating to Neutral, warning that the run-up in price had made shares too expensive.

In the past 30 trading sessions, LinkedIn’s shares have gained almost 3%. In terms of competition, analysts have cautioned that while LinkedIn is the largest professional social network, competitor Viadeo has more users in high-growth countries like China.

Collins Stewart set an $86 price target, short of the north-of-$100 values the company saw in its post-IPO surge.

LNKD was most recently up 0.6% at $62.12 a share, 39 cents higher.

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