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The Zacks Analyst Blog Highlights: LinkedIn, Twitter, Constant Contact, RealPage and Rackspace Hosting

CHICAGO, Feb. 7, 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), Twitter (NYSE:TWTR-Free Report), Constant Contact, Inc. (Nasdaq:CTCT-Free Report), RealPage, Inc. (Nasdaq:RP-Free Report) and Rackspace Hosting, Inc. (NYSE:RAX-Free Report).

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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 Mixed, Lower Guidance Tanks Shares

After the bell Thursday, LinkedIn (NYSE:LNKD-Free Report) reported its fiscal 4th quarter and full-year numbers. And while the professional Internet media firm topped estimates on revenues, it was an earnings miss on the bottom line. LNKD shares are sinking like a stone in the after-market.

Earnings of 5 cents per share (before non-recurring items, stock-based compensation and amortization) missed the Zacks Consensus Estimate of 8 cents. Yet revenues of $447.2 million in the quarter topped the Zacks Consensus Estimate of $440 million. LinkedIn's 277 million members overall was more than analysts had expected. Talent Solutions, which make up over half the company's total business, increased 53% year over year, and Marketing Solutions and Premium Subscriptions also demonstrated healthy year over year growth.

But the guidance? That's another story.

Both for fiscal Q1 and full-year 2014, LinkedIn low-balled their estimates well below where we anticipated guidance would be. While the company estimates revenues between $455-460 million next quarter -- a steady improvement from Q4 -- guidance is lower than the Zacks Consensus Estimate by $7 million. Full-year guidance of $2.02-2.05 billion is similarly down from the Zacks estimate of $2166 million we were expecting.

So now analysts will get busy downwardly revising estimates, which will likely keep LinkedIn a Zacks Rank #5 at least a little while longer. But first, the after-market is letting LinkedIn know how it feels about revenue projections like these, and the results aren't pretty: LNKD shares are down around 10% just since the earnings announcement. In regular-day trading LinkedIn was up 4.24%; apparently investors thought the company's report was going to be a lot better received than this.

As we saw with Twitter (NYSE:TWTR-Free Report) yesterday failing to reach an expected growth target and seeing the stock get punished in late trading, so we see here today with LinkedIn not expecting to keep up its growth trajectory in the current year. Perhaps much was based on some pretty lofty expectations -- speaking of, LinkedIn's market cap is the very definition of a lofty expectation -- and cooler heads will prevail once everything is sorted out. But in the meantime, if you're linked to LinkedIn, you're probably feeling a little dragged down right now.

Nadella's Niche: 3 Cloud Choices

The elevation of Nadella and his successes with Microsoft's cloud division illustrate how crucial the segment will be going forward. Bessemer Venture Partners (BVP) launched a Cloud Index in July last year which captures the fortunes of the top 30 cloud computing companies. These companies were collectively valued at $100 billion at the time. This was a clear indication, BVP said, that leveraging the cloud to power software and data storage was a theme that would come to dominate the tech domain.

Below we present three companies operating in the cloud computing domain, each of which also have a good Zacks Rank.

Constant Contact, Inc.

Constant Contact, Inc. (Nasdaq:CTCT-Free Report) provides engagement marketing tools available on demand. These are customized for small companies, non-profit organizations and associations. Among its prominent offerings are products which can be used for social media and event marketing, email marketing as well as survey tools.

Constant Contact, Inc. holds a Zacks Rank #2 (Buy) and has expected earnings growth of 98.00%. The forward price-to-earnings Ratios (P/E) for the current financial year (F1) is relatively high at 53.70. However the price to sales ratio (P/S) is 2.9, lower than the industry average of 5.4.

RealPage, Inc.

RealPage, Inc. (Nasdaq:RP-Free Report) offers demand software solutions aimed at the housing rental sector. Among the company's products are property management systems and seven groups of valued added services which are software enabled. The company made important acquisitions last year, such as Windsor Compliance, a compliance monitoring services company.

Currently the company holds a Zacks Rank #2 (Buy) and has expected earnings growth of 32.50%. It has a P/E (F1) of 39.53. At 4.3, the company's P/S is lower than the industry average of 5.4.

Rackspace Hosting, Inc.

Our third choice is Rackspace Hosting, Inc. (NYSE:RAX-Free Report). The company has a wide range of cloud computing products. This includes public, private, dedicated and hybrid hosting. Operating across 120 countries, the company has a presence in Zurich, Hong Kong, Sydney and Amsterdam, aside from the U.S.

Besides a Zacks Rank #2 (Buy), RAX has expected earnings growth of 19.60%. It has a relatively higher P/E (F1) of 50.48. However, its P/S is 3.6, lower than the industry average of 5.4.

With major tech players increasingly focusing on the cloud, this domain may offer significant growth in the future. Operating exclusively in the cloud business, these companies may be best placed to leverage those gains and would make good additions to your portfolio.

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

About Zacks Equity Research

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