LinkedIn stock roared to record prices Friday, rising more
than 20 percent and breaking the $150 level for the first time after the
professional networking company destroyed expectations by recording its first
quarter with more than $300 million in revenue.
Shares moved as high as $151.89, a new all-time intraday high for the company, by 11 a.m. Pacific time Friday, when shares were trading for $151.75, a gain of $27.66, or 22.3 percent, from Thursday's closing price.
The Mountain View company has been the most successful social-media stock on the market since its initial public offering at $45 a share in May 2011. Investors and analysts have been wowed by the company's continuing growth,
which has allowed it to beat analyst projections for quarterly revenues in every single quarter since the IPO.
The final three months of 2012 was no different, as LinkedIn blew away forecasts for revenues and profits. LinkedIn reported revenues of $303.6 million, 81 percent higher than the same quarter in 2012, with profits of 35 cents a share. Analysts on average expected the company to report profits of 19 cents a share on revenues of $280 million, according to Thomson Reuters.
For the calendar year, LinkedIn barely missed topping $1 billion in revenues at $972.3 million, 86 percent higher than the 2011 total of $522.2 million. Excluding certain items, the company brought in 89 cents a share on the year, more than doubling its 2011 profits of 35 cents a share.
"2012 was a transformative year for LinkedIn," CEO Jeff Weiner said in Thursday's news release, later adding, "The products we delivered throughout the year drove member engagement and financial results to record levels in the fourth quarter."
Even the company's projections for the current quarter were stronger than expected, as LinkedIn forecast first-quarter revenues between $305 million and $310 million, while analysts expected $301 million.
"You can pick out a lot of things that were great, from customer adds to accelerating revenue to growth in international," Needham analyst Kerry Rice told Reuters on Thursday. "On top of that, guidance is pretty outstanding. And from a historical perspective, they'll likely beat those numbers too."
Analysts responded Friday morning by increasing their price targets for LinkedIn. Bank of America, Citigroup, JPMorgan, Wedbush Securities, Cantor Fitzgerald, Evercore Partners and Piper Jaffray were among the analysis firms that pushed higher their estimates for the best time to sell the stock.
Some of those price targets are still lower than the stock's skyrocketing price Friday, however. Cantor Fitzgerald analysts raised their target from $125 to $145, Wedbush pushed its target from $106 to $140, and Northland Capital increased its target from $125 to $145. MarketWatch, which tracks 30 analysts who cover LinkedIn, reported that the average price target on the stock increased from $137.50 to $150, which puts it right in line with Friday's price.
While Rice told MarketWatch that the valuation of LinkedIn "remains challenging to justify" because of a very high price-to-earnings ratio, Evercore Partners analyst Ken Sena wrote in a note Friday that "despite the earnings multiple, we view valuation as defensible given its explosive growth within huge addressable markets, major competitive barriers, and attractive gross margin leverage." Sena increased his price target from $140 to $160.
Wall Street was having a good day overall through Friday's morning session, with indexes gaining and the Dow Jones industrial average again cresting 14,000. Technology stocks were especially hot, as the tech-heavy Nasdaq had the largest gains of the three major stock indexes.
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