Pacific Crest Asks If Valuation Is A Worry At LinkedIn-Lynda Acquisition

In a report published Thursday, Pacific Crest analyst Evan Wilson stated that LinkedIn Corp (NYSE: LNKD)'s acquisition of Lynda.com "makes lots of sense" but the valuation LinkedIn paid is being called in to question.

LinkedIn acquired Lynda for $1.5 billion, or 10.7x 2014 revenue. Wilson noted that he is "struggling" with the valuation as at the end of the day Lynda is a subscription-based content company with tremendous competition. The analyst added that the price tag on the deal is not much of a discount to the approximately $2.1 billion enterprise value of New York Times Co (NYSE: NYT), which is also a subscription-based content company with "far superior" lineage, reach and quality of content creators.

Nevertheless, Wilson stated that he "loves" LinkedIn's move into online education as it can "deepen" its footprint at a time when more companies are providing fringe benefits including online education. In addition, online education is "synergistic" with LinkedIn's premium subscribers who may want to acquire new skills.

Shares remain Outperform rated with an unchanged $295 price target.