Helfstein: Hold on Yelp Due to Share Run-Up
Jason Helfstein, Managing Director and Senior Internet Analyst with Oppenheimer, says the company's Hold rating on Yelp (NYSE: YELP) is not a reflection of the company's potential, but rather of the fact that shares are already up 72 percent from its initial IPO suggested price.
Oppenheimer is among several of Yelp IPO's underwriters that started their coverage on the company with neutral ratings, an uncommon occurrence. Helfstein expains for CNBC Oppenheimer's recommendation on shares.
"YELP is currently the most expensive stock in its space. It has soared 7 percent from when it went public. The company has terrific potential and multiple levers its can pull on going forward, but at the end of the day, it remains a very expensive stock," he told CNBC's Half Time Report.
Helfstein pointed that pay rate from advertisers at Yelp is currently 25 percent below industry peers, which he sees as an opportunity going forward rather than a weakness. "Currently, only around 4 percent of advertisers on the site are paying ones," he notes, suggesting that there is upside to ratings as advertising channels pick up to peer levels.
Helfstein concludes that Oppenheimer's Hold rating is a signal to wait and see where shares go from here, not a reflection on fundamentals. YELP is currently down 2.9 percent from yesterday's close of $25.81.
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