Cantor Bumps Yelp's Price Target To $42 Following Q2 Results

Cantor Fitzgerald upped its price target on Yelp Inc YELP by $4 to $42 after the company reported surprise Q2 profit, driven by strong local ad growth. The company once again raised its FY16 outlook.

The company reported GAAP EPS was $0.01 vs. cons' $(0.07) loss estimate and grew revenue by 30 percent to $173.4 million versus consensus estimate of $169.8 million. The brokerage attributed the improvement in the results to improving ad environment and several smart moves by management.

Local ad revenue rose 41 percent to $151.9 million, ahead of Street's $147.9 million and local ad accounts increased 32 percent to 128K, in line with consensus.

For 2016, management raised guidance to revenue of $700-$708 million, versus consensus' $699.6 million estimate, and up from prior estimate of $690-$702 million.

"We remain constructive on the stock given its 1) exclusive focus on the rapidly growing local ad market, 2) improving operating metrics, 3) organic scale and network effect, and 4) compelling valuation relative to growth/profitability potential," analyst Youssef Squali wrote in a note.

Squali, who has a Buy rating on the stock, also raised his 2016 outlook. For 2016, the analyst now expects $707.4 million/ ($0.14) in revenue/EPS versus prior estimate of $702.2 million/ ($0.25), previously.

At time of writing, shares of Yelp climbed 14 percent to $37.28. The stock touched a new 52-week high of $37.45 on the day.