The rally in LinkedIn’s share price has taken a bit of a hit from an unlikely source, one of the underwriters for its initial public offering.
Shares in the social network fell 4.6 percent on Monday, to $104.83, after analysts at JPMorgan Chase downgraded the company to neutral from overweight.
Not that JPMorgan, which co-led the I.P.O. alongside Morgan Stanley and Bank of America Merrill Lynch, has fallen out of love with LinkedIn.
“Our move to neutral here is based on valuation rather than fundamental concerns,” Doug Anmuth wrote in Monday’s note to JPMorgan clients, adding that he had a positive overall view on the company.
JPMorgan was one of several banks whose analysts initially gave LinkedIn a warm welcome to research coverage.
Mr. Anmuth, whose price target is $85 a share, wrote that the company’s risk-reward profile was better-balanced now and that there was a little less upside to the stock. LinkedIn’s shares have jumped 44 percent in the last three weeks; the Standard Poor’s 500-stock index, on the other hand, has risen just 3 percent.
To show just how richly valued LinkedIn is at the moment, Mr. Anmuth pointed out that as of Friday’s close, the company had a market value of $12 billion, while Netflix had one of $15 billion — despite the fact that Netflix has revenue and net income seven times greater than those of LinkedIn. (LinkedIn is currently valued at just under $10 billion.)
Mr. Anmuth conceded that his thesis could be proved wrong if LinkedIn blew past expectations for second-quarter earnings, which are to be announced on Aug. 4. Because less than 10 percent of LinkedIn’s shares are currently on the market, a major reult above analysts’ quarterly estimates could propel the stock price significantly higher.
Article source: http://feeds.nytimes.com/click.phdo?i=f1ef2b38444ffd48312bca5fd86dc781
Speak Your Mind
You must be logged in to post a comment.