Yelp Remains 'Controversial, Out-Of-Favor And Out-Of-Consensus'

Credit Suisse issued a report on the Consumer Internet Space and highlighted Yelp Inc YELP, as analysts believe that the company presents a unique value proposition even while shares remain currently out of favor. Credit Suisse reiterated Yelp as a Buy with a $44 price target.

Analysts Stephen Ju, Yoni Yadgaran and Bo Yang wrote, "As sales personnel growth is the engine driving Yelp's Local Advertising Account and revenue growth, we view this as an important leading indicator in its recovery...Yelp continues to present a unique consumer value proposition and as a property remains under-monetized."

Credit Suisse's long-term investment thesis is based on three key factors:

• Modest deceleration in Local Advertising Accounts could lead to higher Local Advertising Revenue as sales force attrition is decreased and the company can achieve accelerated top line growth.
• International expansion of products and services continues to be under-monetized which presents a way to expand market share and grow free cash flow with exposure to new markets.
• Increasing profitability based on possible further monetization of contributions from the Eat24, SeatMe, and Yelp platform contributions.

Overall, Credit Suisse believes Yelp has room to grow its platform and achieve revenue and margin growth by expanding internationally, making business operations more efficient, and leveraging the contributions it receives daily.

Image credit: Nan Palmero, Flickr