Investors Buying Yelp Shares As Jefferies Reinstates Buy Rating, Raises Target To $80

Analysts at Jefferies led by Brian Pitz and Brian Fitzgerald reinstated a Buy rating on shares of Yelp YELP Tuesday morning. The analysts had previously restricted coverage on the name. Jefferies' price target was raised from $50 to $80. Pitz, Fitzgerald, and team cited the recent closing of Yelp's secondary offering. The note said, "We continue to believe Yelp's breadth, depth and penetration of content is very hard to replicate and is the company's core competitive advantage against other players trying to enter this market." "Yelp's Reviews Are a Function of Time, Not Money, and therefore, its is difficult even for other cash rich players to catch up to Yelp in its established markets. The sheer number of Yelp's reviews, which we believe are multiple times bigger in most categories than competitors, still continue to grow at a rapid rate (47M end of 3Q13, up 43% Y/Y)," according to the Jefferies' analysts. Pitz and Fitzgerald are currently looking for Yelp to report a Q4 GAAP loss of $0.01/share, versus the previous estimate for a gain of $0.02/share. The FY13 loss was increased from $0.07/share to $0.12/share. The analysts are expecting Yelp to report a FY14 gain of $0.12/share, down from the prior estimate of a $0.23/share gain. The current analyst consensus estimates for Yelp sit at a $0.02 loss/share for Q4, at a loss of $0.14/share for FY13 and at a gain of $0.19/share for FY14. With shares of Yelp trading up nearly 4 percent to around $65.20 at last check, Jefferies' new price target represents potential upside of about 23 percent.