Last week was a very bad week for social media giants reporting earnings. LinkedIn Corp. (NYSE: LNKD) was no exception, losing more than 18% the day after its earnings. So, what are investors supposed to think when they see one analyst upgrade the stock into weakness? All they have to do is look at a report from the independent research firm Argus.

Argus upgraded LinkedIn to a Buy rating from Hold and set its target price at $280, implying an upside of 39% from current prices. The independent research firm also raised its long-term rating to Buy.

LinkedIn clearly stumbled in the first quarter with a sales force transition and, according to some, an “unforced error.” This stumble, in conjunction with greater-than-expected currency headwinds and anticipated dilution from the Lynda.com acquisition, led the company to significantly lower its 2015 guidance. The market reacted accordingly, driving the shares down more than 18% last Friday.

Argus believes that the company has been willing to sacrifice margins to build market share, and its efforts have paid off in strong membership growth and engagement. LinkedIn is also innovating across its product lines to deepen customer relationships with both members and enterprise clients. Its growth over the next few years will depend on its ability to increase and retain membership, and to more fully engage members with the website. LinkedIn has also made international expansion a priority and is now making a concerted move into China.

In February 2013, Lynda.com acquired Video2Brain, an Austrian online video education company that offers Web design, programming and computer training in German, French and Spanish.

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LinkedIn also acquired Refresh.io in early April. Refresh is a small Silicon Valley startup that has developed a mobile application that compiles publicly available information on a user’s contacts, drawing on information from Facebook, LinkedIn, Twitter and other sources. LinkedIn appears to be integrating Refresh’s capabilities into its own similar Connections product, as Refresh is shutting down its application and not accepting new members. Terms of the Refresh deal were not disclosed.

Argus detailed its valuation of LinkedIn as:

LinkedIn shares are down 13% year-to-date, compared to a 2% increase for the Russell 1000. Of course, this includes the more than 18% drubbing that LinkedIn shares took on May 1, after management lowered its guidance. The trailing enterprise value/EBITDA multiple of 81 is almost double the peer median of 44, though the stock has often traded at 3.0- to 3.5-times the peer median. LinkedIn’s enterprise value/sales multiple of 9.6 is also above the peer median of 7.8. The forward enterprise value/EBITDA multiple of 26 is 125% above the peer average, though this is much less than the average premium of 215% over the past two years and close to the two-year low of 116%. We are upgrading LinkedIn to BUY with a target price of $280, implying a return to the stock’s average enterprise value/EBITDA multiple.

24/7 Wall St. had mentioned that this past week was not kind for social media investors by any stretch of the imagination. Most of the key social media stocks were sold off so much that one has to wonder if they are becoming oversold, or if they are at least close to being in an oversold chart setup. The reality is that the earnings reports just did not live up to what could still justify such high valuations, and the stock market has removed billions of dollars from the social media valuations combined.

Shares of LinkedIn were down 2% at $201.20 Monday afternoon. The stock has a consensus analyst price target of $257.49 and a 52-week trading range of $136.02 to $276.18.

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