Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of LinkedIn Corp. (NYSE: LNKD ) climbed about 3% in premarket trading after RBC Capital upgraded the online professional network from sector perform to outperform.
So what: Along with the upgrade, analyst Mark Mahaney boosted his price target to $250 (from $225), representing about 20% worth of upside to yesterday's close. While momentum traders might be turned off by LinkedIn's share-price weakness in recent months, Mahaney thinks that Mr. Market might be overestimating the risks surrounding its growth going forward.
Now what: According to RBC, LinkedIn's risk/reward trade-off is pretty attractive at this point. As Mahaney noted:
Drag Issues have included: 1) overly aggressive Street estimates, 2) a heavier than expected investment outlook for '14, 3) a greater-than-expected slowdown in Talent Solutions revenue growth, and 4) uncertainty over Marketing Solutions format changes. The first issue has been addressed -- Street '14 EBITDA estimates have been reduced 11% since the beginning of this year. And we believe LNKD's '14 investments -- salesforce buildouts, product and market expansions, and acquisitions -- are coming from a position of strength against large TAMs. Our very recent proprietary work helps address Drag Issues 3 & 4.
When you couple that improving outlook with LinkedIn's still-sluggish stock price -- off about 20% from its 52-week highs -- it's tough to disagree with LinkedIn's upgrade.
More compelling ways to grow
They said it couldn't be done. But David Gardner has proved them wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.