Yelp: "We Expect Local/Mobile to Drive Strong Quarter," Says Cantor Fitzgerald

In an equity research report published Monday morning, analysts at Cantor Fitzgerald provide a preview on Yelp Inc.’s YELP earnings, scheduled for February 5. The firm’s Youssef Squali, Kip Paulson and Naved Khan say they expect strong fourth quarter 2014 results, “with local ad revenue powering ahead at an anticipated rate of 57% Y/Y.”

The report highlights: “The local online advertising opportunity remains substantial, and the number of players with scale, brand, network effect, and solid execution is very limited, positioning Yelp as a prime beneficiary both as an operator and as an acquisition target, in our view.”

Mobile usage and monetization will also remain key for growth, the analysts assure. “In 3Q:14, mobile remained strong, with uniques growing 46% Y/Y to 73M. Importantly, these mobile users tend to be the most active and engaged users/contributors on the platform.”

The Estimates

Cantor Fitzgerald expects fourth quarter revenue and EBITDA of $108.2 million (+53.1% Y/Y) and $24.1 million (22.3% margin), respectively. These are practically in-line with consensus estimates (FactSet) at $108.4 million and $24.5 million, correspondingly, and also in-line with guidance of $107-108 million and $24-25 million.

Moreover, the report highlights that with limited exposure to foreign exchange fluctuations, guidance is likely in-line with consensus: “for 1Q:15, consensus estimates for revenue and EBITDA are $115.1M and $21.4M, respectively.”

The firm maintains a Buy rating and an $83 price target on the stock, which currently trades below $52.