Like investors who are selling off Yelp Inc (NYSE: YELP) in droves, Brean Capital is giving the company a negative review following its Q4 earnings. Brean analysts are not impressed with Yelp’s plans to increase its marketing spend and increase its sales force, which will negatively impact EBITDA moving forward.
Constructively, Brean notes that Yelp’s efforts to help consumers transact within the Yelp platform are progressing, with roughly 350,000 transactions on the quarter. Additionally, Yelp is delivering in mobile, increasing views nearly 37 percent, while desktop views declined just 0.1 percent.
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Ultimately, Brean modified its sales and adjusted EBITDA forecasts, upping the sales portion but lowering its EBITDA. The FY15 EBITDA estimates fell to $103 million from $121 million, while sales are expected at $548 million from $540 million. In FY16, Brean sees EBITDA at $153 million, up roughly 50 percent year-over-year.
Brean has a Hold rating on Yelp.