Wunderlich: Yelp Setting Up 'Well'

In a report published Friday, Wunderlich analysts maintained a Buy rating on

with a price target of $90. The European Commission has announced charges against

for "hindering its competitors' search results in favor of its own." Google would now be forced to be less aggressive with showcasing its own search results in other verticals, including travel and local businesses. "Yelp has less than 5% of its revenues and over 30mm monthly unique visitors overseas (mainly all Europe) and saw declines in 2Q14 from Google's SEO changes," the analysts pointed out. The EC's latest decision would have a positive impact on Yelp and

(rated as Hold), among others. The analysts expect Yelp to report sequential growth of unique visitors "in the upper-single-digit percentage area for Q1 based on Quantcast data." This data also indicates q/q growth in the first couple of weeks of the second quarter. Additional investments of $20mm in sales and marketing spend this year should also boost "the company's presence and address concerns of slowing user growth," the analysts mentioned. In the report Wunderlich noted, "Yesterday the company introduced Yelp Now, a new search capability to allow users to filter results to find restaurant reservations and order takeout/delivery food, which is a logical extension of the SeatMe and Eat24 acquisitions. The company will expand it to other verticals, which should improve the user experience and ability to target users with more relevant advertising." "…recent developments on the legal, regulatory front, as well as enhanced search capabilities, should be positive for the outlook," the analysts added.