UPDATE: Sterne Agee Initiates Coverage On Yelp On Long-Term Prospects

Sterne Agee initiated coverage of Yelp, Inc. YELP in a report issued Thursday with a Buy rating and $85 price target.

Analysts Arvind Bhatia and Brett Strauser were “bullish on Yelp’s longer-term prospects and its positioning vis-à-vis many of its competitors.”

The report noted that “YELP is trading at ~ 12x 2014E Sales and 8.3x 2015E Sales. This is a premium to its Internet peer group, which is trading at ~10x 2014E Sales and ~7x 2015E Sales.”  

The analysts believed the “premium is justified given Yelp’s higher growth rate compared to the group. Investors expect Yelp to grow sales at 61 percent in 2014 and 45 percent in 2015 compared to the group average growth rate (excluding Yelp) of around 30 percent.”

The report acknowledged a number of controversies surrounding the company, however, Bhatia thought Yelp is benefiting from multiple long-term trends and that management is executing well.

Yelp, Inc. closed Thursday at $69.62, down 0.76 percent.