The Zacks Analyst Blog Highlights: LinkedIn, Facebook, Netflix, Tenet Healthcare and Aetna - KTRE.com | Lufkin and Nacogdoches, Texas

The Zacks Analyst Blog Highlights: LinkedIn, Facebook, Netflix, Tenet Healthcare and Aetna

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SOURCE Zacks Investment Research, Inc.

CHICAGO, May 2, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the LinkedIn (NYSE:LNKD-Free Report), Facebook (Nasdaq:FB-Free Report), Netflix (Nasdaq:NFLX-Free Report), Tenet Healthcare Corp. (NYSE:THC-Free Report) andAetna Inc. (NYSE:AET-Free Report).

Zacks Investment Research, Inc., www.zacks.com

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

LinkedIn Beats Revenues but Guides Lower

LinkedIn (NYSE:LNKD-Free Report), the largest network of professionals online, reported Q1 earnings after the bell Thursday, beating on both the top and bottom lines for the quarter. Revenues of $473 million in the quarter beat the Zacks consensus estimate of $466 million, representing a 46% gain year over year.

Earnings reached -$0.08 per share (discounted for amortization of a non-recurring item; LinkedIn's non-GAAP headline number was 38 cents per share). This amounts to a pretty big miss on the bottom line -- the Zacks consensus was looking for earnings of a penny in the quarter.

Talent Solutions -- now accounting for 58% of LinkedIn's business -- grew 50% year over year, which is what analysts had been expecting. LinkedIn now has 276 million users. Marketing was up 36% from Q1 2013 to $102 million, and Premium Subscribers brought in $96 million for the quarter.

Full-year revenue guidance, however, fell beneath the Zacks consensus of $2.09 billion to a range of $2.06 - $2.08 billion. So far in the after-market, this has helped cause a 3% sell-off after LNKD shares gained 5% in regular Thursday trading.

The real story with a growth play like LinkedIn -- a la Facebook (Nasdaq:FB-Free Report), Netflix (Nasdaq:NFLX-Free Report), et. al. -- is not so much earnings per share as a growing audience. And as long as growth projections -- however big, and 50% growth is still a good number -- remain in-line with analysts' projections, it's going to be tough for a company like LinkedIn to gather much momentum from here, especially after being up considerably today.

The Chinese-language LinkedIn was launched in beta form, which is potentially very good news down the road. LinkedIn currently has 4 million Chinese users, but is targeting 140 Chinese workers, which would grow the company another 50% all by itself. But with full-year revenue guidance now below where we were expecting, it's unclear from the earnings release when this great China boon is expected to take place.

LinkedIn shares got hit hard when momentum stocks sold off in March; LNKD is still down over 20% year to date. With a 9% run-up this week, clearly investors were pricing in some good news. And LinkedIn seem to doing fine overall -- just not great. So when does greatness of LinkedIn bestow itself? That's what we'd all like to know.

How Likely Is Tenet Healthcare (THC) to Beat Earnings This Quarter?

Tenet Healthcare Corp. (NYSE:THC-Free Report) is set to report first-quarter 2014 results on May 5, 2014. Last quarter, it posted a 26.47% surprise. Let's see how things are shaping up for this announcement.

Factors this Past Quarter

Tenet Healthcare's rising debts is a matter of concern. Tenet Healthcare has been continuously issuing debts to repay earlier debts. Consequently, interest expenses are also on the rise. In the past quarter, the company issued 5-year senior unsecured notes worth $600 million which resulted in a further increase in interest expenses. High financial leverage not only dampens the balance sheet but also makes future debt accessing difficult.

However, on the brighter side, Tenet Healthcare has engaged in partnerships with entities like University Health System and Yale New Haven Health System in the past quarter that is likely to enhance its operations. Further, the collaboration with Aetna Inc. (NYSE:AET-Free Report) in Feb 2014 is slated to expand the membership base of the company and enhance revenues. Nevertheless, persistent inpatient revenue pressure and a company guided inpatient volume trend of (2)–0% in 2014 raises apprehension.

Earnings Whispers?

Our proven model does not conclusively show that Tenet Healthcare is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for an earnings beat to happen. That is not the case here as you will see below.

Negative Zacks ESP: That is because the Most Accurate estimate stands at (20) cents while the Zacks Consensus Estimate is pegged at (15) cents, making the difference -33.33%.

Zacks Rank #4 (Sell): Tenet Healthcare's Zacks Rank #4 lowers the predictive power of ESP as when combined with a negative ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially if the company sees zero or negative estimate revisions momentum.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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