EFTA00666165.pdf

From: Richard Kahn To: Jeffrey Epstein <jeevacation@gmail.com> Subject: FW: LinkedIn Corp: A Platform at the Crossroads; Downgrading to EW, $125 PT Date: Wed, 16 Mar 2016 11:48:10 +0000 From: Morgan Stanley Reply-To: Date: Tuesday, March 15, 2016 at 11:17 PM To: Richard Kahn < Subject: Linkedln Corp: A Platform at the Crossroads; Downgrading to EW, $125 PT C LinkedIn Corp: A Platform at the Crossroads; Downgrading to EW, $125 PT Subscription Notification: March 16 Brian Nowak, CFA — Morgan Stanley March 16, 2016 4:01 AM GMT We downgrade LNKD to EW (from OW) as slowing enterprise and online talent solutions growth and rising investment across all 4 businesses reduce earnings power and raise execution risk. With its current product offering, LNKD isn't likely to be as big of a platform as we previously thought. Why We Were Wrong and What's Changing: We have previously been bullish on LNKD's platform monetization opportunity driven by: 1) multiple years of assumed strong Talent Solutions (TS) growth as more large enterprises and SMBs adopt the platform and 2) budding new monetization opportunities like B2B advertising, Lynda, and Sales Navigator. But 4Q:15 results, 2016 guidance, decelerating large enterprise customer growth, and recent management commentary on strategic investments make us believe we have overestimated LNKD's ability to grow its platform and underestimated the investment needed to grow. As such, we are reducing our near-term and long-term revenue and EBITDA forecasts (see Exhibit 1 EFTA00666165 and Exhibit 2 ) and now believe LNKD will be a materially smaller platform than we previously thought. We are reducing our DCF-based PT to $125/share (from $190) as well, driven by our lower long-term cash flow forecasts and increased execution uncertainty. This PT implies paying I2X 2017 non-GAAP EBITDA for 19% EBITDA growth...a —5% premium to the median multiple of its Internet platform peers for 200bp faster growth. LNKD is a Platform at the Crossroads of Uncertainty: LNICD's ability to re-accelerate TS growth and/or deliver better than expected results in B2B advertising, Lynda or Sales Navigator could reinvigorate investors and drive the stock back toward our bull case valuation ($200/share). That said, continued faster than expected deceleration and/or mis-execution will likely cause the stock to be range-bound (best case) or trend toward our bear case valuation ($60/share). Lowering Talent Solutions Field Revenue with More Tepid Large Enterprise Growth...We are low Click here to see the full report. This alert is sent from: Andrew Atlas, You received this because you asked to be alerted to: LINKEDIN CORPORATION Please contact your FA if you want to unsubscribe from the alerts. Disclosures: Please see the full report for risks, disclosures and other important information. Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule") and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of the Municipal Advisor Rule. Copyright The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. EFTA00666166 O 2016 Morgan Stanley Smith Barney LLC. Member SIPC. P I * I EFTA00666167