The Zacks Analyst Blog Highlights: LinkedIn, AOL, Facebook, Paychex and Qiagen

May 01, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, May 1, 2013 /PRNewswire/ -- 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 LinkedIn Corporation (NYSE: LNKD), AOL Inc. (NYSE: AOL), Facebook Inc. (Nasdaq: FB), Paychex Inc. (Nasdaq: PAYX) and Qiagen (Nasdaq: QGEN).


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Here are highlights from Tuesday's Analyst Blog:

LinkedIn Likely to Post Positive Surprise

We expect professional networking solution provider LinkedIn Corporation (NYSE: LNKD) to beat expectations when it reports third-quarter 2013 results on May 2.

Why a Likely Positive Surprise?

Our proven model shows that LinkedIn is likely to beat the earnings estimate because it has the right combination of two key ingredients.

Zacks ESP: Expected Surprise Prediction or ESP (Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is at +120.0%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #2 (Buy): LinkedIn carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating estimates. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement. 

The combination of LinkedIn's Zacks Rank #2 (Buy) and +120% ESP makes us very confident in looking for an earnings beat on May 2.

What is Driving the Better than Expected Earnings?

The company has been delivering good numbers over the last few quarters, driven by the increase in demand for their professional networking solutions, which provides added benefits to prospective employers and talent acquisition firms searching for skilled manpower. As a result, the Talent Solutions and Premium Subscription segments were have strengthened over the last few quarters. Moreover, the purchase of Pulse greatly improves its marketing efforts in the Talent Solutions business.

Other Stocks to Consider

LinkedIn is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

AOL Inc. (NYSE: AOL), Earnings ESP of +3.03% and Zacks Rank #2 (Buy)

Facebook Inc. (Nasdaq: FB), Earnings ESP of +12.50%and Zacks Rank #2 (Buy)

Paychex Inc. (Nasdaq: PAYX), Earnings ESP of +2.70% and Zacks Rank #2 (Buy)

Qiagen Acquires Ingenuity Systems

In an attempt to manage its growing volume of genomic data, Qiagen (Nasdaq: QGEN) recently acquired Calif.-based privately owned company, Ingenuity Systems, Inc. Through the acquisition, Qiagen will have access to Ingenuity's proprietary Ingenuity Knowledge Base and software applications, which is an advanced knowledge system and analysis solution for complex biomedical information. However, financial terms of the deal were not disclosed.

Over the recent past volume of data generation through next-generation sequencing (NGS) has been increasing. This has compelled Qiagen to realize the need for advanced solutions of Ingenuity. These solutions, according to the company, will act as a critical success factor in analysis and interpretation of complex biological data.

Qiagen claims that, with the Ingenuity products, the company will be able to widen its scope in the rapidly growing market of sequencing with faster and efficient data analysis. Ingenuity stated that, while an entire human genome sequence takes only 2 days to complete, the data analysis can take months and years. However, the Ingenuity product line needs some time (may be some minutes) for data interpretation.

Viewing the substantial potential of the molecular diagnostic market globally, Qiagen is currently focusing on expanding its diagnostics products offering. The company currently derives around 50% of its total revenue from this segment, which is likely to increase with this acquisition. Qiagen has acquired several companies to expand its product portfolio, the significant ones are Cellestis and Ipsogen in 2011.

We are encouraged by Qiagen's focus on strategic initiatives to drive growth and profitability in the molecular diagnostics market. Its innovative tests in the genomic/esoteric arena, with a focus on the high-margin esoteric testing business, are expected to accelerate the company's sales growth on the back of growing market demand, not only domestic but worldwide.

This is also provoking several small laboratory companies to introduce their comprehensive portfolio of genetic tests.

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