Analysts weigh in today on professional networking giant LinkedIn Corp (NYSE:LNKD) and online retail giant Amazon.com, Inc. (NASDAQ:AMZN). The analysts reflect on the acquisition agreement between LinkedIn and Microsoft, and Amazon’s unit growth in the Jun-16 quarter. Let’s take a closer look:
This morning, LinkedIn announced that Microsoft (NASDAQ:MSFT) will be acquiring it for $196.00/share in cash, sending shares up 47%.
Axiom analyst Victor Anthony weighed in on the news, noting, “We have long viewed LNKD as having one of the best business models on the Internet. With LNKD Microsoft will own a Talent Solutions business that has seen its growth slow due to the law of large numbers, but is only 20% penetrated into large enterprises. The Marketing Solutions business is being buttressed by Sponsored Updates, while Premium Solutions is being driven by Sales Navigator, which has strong growth opportunity. China also presents longer-term opportunity and LNKD is one of the few Internet companies we believe has a better chance of succeeding in that market. MSFT’s scale and balance sheet should help LNKD accelerate its growth across all three business lines.”
“This acquisition highlights the potential for M&A in the Internet space, with every company except Alphabet, Amazon, Facebook, and Alibaba becoming acquisition targets – these companies are likely the acquirers of less valuable Internet assets,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Victor Anthony has a yearly average return of 10.8% and a 58% success rate. Anthony has a -19.1% average return when recommending LNKD, and is ranked #113 out of 3979 analysts.Out of the 36 analysts polled by TipRanks, 20 rate LinkedIn Corp stock a Buy, while 16 rate the stock a Hold. With a downside potential of 10.3%, the stock’s consensus target price stands at $173.
Piper Jaffray analyst Gene Munster reiterated an Overweight rating on shares of Amazon, with a price target of $800, as Amazon search interest analysis indicates strong performance QTD.
Munster explained, “According to our analysis of Google trends search data, Amazon’s unit growth should show almost no deceleration during the Jun-16 quarter. The growth of search interest QTD continued on at a rate of 27% vs. 27% in the Mar-16 quarter. Over the past four quarters, our regression analysis has performed well leading us to estimates that are on average ~2.0% under the actual unit growth. We note that over the past 32 quarters our principal component regression analysis has correlated 0.95 with Amazon reported unit growth.”
“We continue to view AMZN as the best positioned stock in our coverage over the next five years, driven by continued retail unit growth strength, operating margin expansion, future expansion from new categories through its platform and a reasonable valuation at ~15x our 2017E EV/EBITDA,” the analyst concluded.
According to TipRanks.com, analyst Gene Munster has a yearly average return of 17.8% and a 62% success rate. Munster has a 36.1% average return when recommending AMZN, and is ranked #5 out of 3979 analysts.
Out of the 44 analysts polled by TipRanks, 39 are bullish on Amazon stock, while 5 are neutral. With a return potential of 9.5%, the stock’s consensus target price stands at $788.25.