SunTrust Sees Rebound Coming For Yelp: Here's Why

Yelp Inc YELP stock has had a rough 2015, with shares down almost 48 percent. Multiple analysts have turned on the stock, including Trip Chowdhry -- who called it "total junk" -- and the Vetr crowd.

In a new note issued this Wednesday, analysts at SunTrust said they were transferring coverage of Yelp from Robert Peck to Matthew Thornton. Thornton maintained a Buy rating on Yelp and increased his price target from $32 to $33 per share. "We see upside to 2016 revenue expectations," he wrote, adding that an "upward revision" to Yelp's consensus revenue estimates could be a catalyst because sentiment is so negative at the moment.

Yelp sports a short interest of 14 percent, 6 percentage points above the peer group average. Just 32 percent of Wall Street analysts are positive on Yelp, half the competitor average.

Despite a revenue growth outlook -- 28 percent in 2016 -- that trumps peers like Amazon.com, Inc. AMZN (21 percent), Tripadvisor Inc TRIP (15 percent) and GrubHub Inc GRUB (25 percent), Yelp trades at an enterprise valuation that's about half the industry norm.

Beyond a sentiment rebound, an additional catalyst SunTrust notes are Yelp's Eat24 and SeatMe businesses. "[W]e believe there is still significant room for innovation on the platform," Thornton wrote.

Risks the analyst noted include the following:

• Greater competition from social media companies
• The anti-Yelp documentary "Billion Dollar Bully," expected to be released in March or April

The stock last traded near $28.50 before Wednesday's open. It neared $100 per share in March 2014.