Here’s Why Analysts Are So Keen on LinkedIn

LinkedIn (NYSE:LNKD) yesterday reported better-than-expected revenue for the first quarter, following its earnings beat with the announcement that it had acquired content sharing company SlideShare for a $118.75 million mix of cash and stock.

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Revenue at the professional networking site rose a whopping 101 percent to $188.5 million in the January through March quarter. The average forecast of analysts polled by Thomson Reuters was $178.58 million. Net income rose to $5 million, from $2.1 million in the year-ago period.

Analysts are now predicting bigger profits ahead as LinkedIn grows to better engage its members. Six brokerages raised their price targets after LinkedIn posted results on Thursday.

“LinkedIn is disrupting both the online and offline job recruitment markets, and deeper corporate penetration and increasing member engagement will drive strong results going forward,” said J.P. Morgan Securities’ analyst Doug Anmuth. The service now has more than 161 million members worldwide. The company makes money by selling services and subscriptions to companies looking for new recruits.

LinkedIn’s performance is being closely observed by investors looking at how a company can monetize a social networking site. LinkedIn was the first prominent social network in the U.S. to make its public debut when it had its initial public offering last May. Many investors are now eagerly looking to Facebook’s impending IPO and hoping to gain some guidance from LinkedIn’s earnings.

LinkedIn shares surged more than 7 percent in after-hours trading, and continued to rally on Friday morning, climbing more than 10 percent in pre-market trading.

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