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LinkedIn Up to Strong Buy: Should It Be in Your Portfolio?

On Sep 29, Zacks Investment Research upgraded LinkedIn CorporationLNKD to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of new services offered by the company and positive estimate revisions over the last 60 days.

Over the last 60 days, three out of four estimates for LinkedIn were revised upward for fiscal 2015. The Zacks Consensus Estimate for fiscal 2015 also improved from a loss of 92 cents to a loss of 85 cents over the same time frame.

It is also worth noting that LinkedIn's second-quarter 2015 revenues not only increased 33.38% year over year to $711.7 million, but also surpassed the Zacks Consensus Estimate of $690 million. The year-over-year top-line growth was mostly backed by the company's ongoing investments in mobile, global expansion of content and jobs and acquisition of lynda.com.

Going further, LinkedIn's traction in the mobile segment is particularly encouraging, primarily due to the launch of its applications for Apple's AAPL iPhones and Android-based smartphones. Synergies from acquisitions are also expected to positively impact results over the long run. The acquisitions of Newsle and Bizo will not only enhance user experience but also garner additional dollars through targeted marketing strategies.

We believe that LinkedIn's initiatives to increase advertising revenues through product launches and partnership programs are praiseworthy. Advertisers are also taking a note of the company's growing user base, in our view.

Most recently, the company reportedly launched an app called Lookup. Better known for connecting people in the same industry, LinkedIn will now connect people in the same company through its new app. Lookup is more like an employee directory app through which users will be able to find, learn about and contact their co-workers through in-app messaging as well as email.

Furthermore, LinkedIn's investments in strategic products are necessary, in our view, as other companies like Facebook FB and Twitter are also looking to expand into the professional networking space.

Nonetheless, continued investments to provide new and improved products and services might affect LinkedIn's profitability in the short run. However, these investments will drive member growth and user engagement over the long haul. We remain encouraged by the 30%-50% top-line growth recorded in the past few quarters.

Another Stock to Consider

Another stock that is worth considering in the technology sector is CyberArk Software, Ltd. CYBR , sporting a Zacks Rank #1.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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