Barclays Upgrades LinkedIn, Last Quarter's Issues Aren't 'Structural'

In a report published Wednesday, Barclays analyst Paul Vogel upgraded the rating on LinkedIn Corp (NYSE: LNKD) from Equal-Weight to Overweight, while raising the price target from $225 to $250. The analyst believes that the issues that affected the company's Q1 results are transitory rather than being "structural."

"While we don't believe Q2 will necessarily be a catalyst for the shares, we do think estimates have been reset appropriately with potential upside to numbers as we hit the back half of 2015 and into 2016," Vogel explained.

The company has lowered its 2015 guidance when it reported its Q1 results, largely due to FX headwinds, as well as the performance of the Talent Solutions and Marketing Services divisions. The analyst believes that the issues at these two divisions are unlikely to be "long-term structural fundamental issues."

"[W]e are increasingly confident in LNKD's long-term positioning and upside and see the current price as an attractive entry point," Vogel stated, adding that the core business remained solid, with the potential for meaningful secular growth, going forward.

The analyst also believes that there is room for growth in the Talent Solutions division, while the LinkedIn offering is expected to offer meaningfully higher ROI than other options. This, in turn, is likely to give the company the power to increase rates in future.

According to the Barclays report, "In our view, LNKD does have some work to do on targeting and tools (at least relative to their peers), but we believe demand is still high with a big opportunity to improve the product for future growth."

In addition, the analyst expects the company to understand a "slow but steady" ramp in Sales Navigator for its Premium subscriptions, with recent checks suggesting "increased optionality for the product in the intermediate to longer-term."