Yelp Analyst Roundup Following Q4 Earnings

Yelp Inc YELP reported Q4 earnings on Thursday and issued guidance below consensus. Investors reacted by sending the stock down 21.51 percent Friday to $45.11.

Analysts weighed in on the company following the earnings report. Below are highlights along with current ratings and price targets.

CRT - Buy, $63 price target

“YELP reported a solid 4Q14, but issued FY15 EBITDA guidance well below consensus expectations, driven by the Company's plans to spend ~$20M on incremental consumer marketing during 2015. We also note that revenue growth decelerated 1,100 bps in the quarter (albeit against a challenging YoY comp) to 56 percent, and that other key metrics decelerated as well. Given this dynamic, what we believe to be a large and largely untapped market opportunity, significant room to drive brand awareness (YELP reported that a recent study by Nielsen showed only 26 percent un-aided brand awareness for Yelp among U.S. Internet users), and management reports of positive results from the Company's $10M in marketing tests in 2014, we believe incremental investment in YELP's brand is justified and timely, though likely to prove unpopular among investors in the near term”

Sterne Agee - Buy, $70 price target

“4Q was another mixed quarter with weaker-than-expected traffic trends, ALBA growth essentially in line but upside in revenue/adjusted EBITDA. Yelp reported 4Q Revenue / Adjusted EBITDA / EPS of $109.9M /$25.1M / $0.24 versus consensus of $108.4M / $24.5M / $0.07 and guidance of $107M to $108M / $24M to $25M. Management attributed traffic weakness to seasonality and indicated traffic trends in January have picked up. Strength in the performance of the oldest cohorts suggests underlying demand and long-term opportunity remain intact.”

Oppenheimer - Outperform, $73 price target

“We see online Local as a greenfield opportunity, with YELP positioned to capitalize on its first mover advantage.
Investments are focused on increasing sales headcount (by 40 percent), and driving higher consumer engagement, as unaided brand awareness is only 26 percent. While mobile UVs have slowed from +52 percent y/y in 1Q, to 37 percent in 4Q, mobile app download ads, and brand advertising should increase users and engagement.”

Credit Suisse - Outperform, $71 price target

“The disclosure of Local Advertising accounts versus prior ALBA which included deal customers serves to eliminate the churn-related overhang, but the sequential deterioration in its desktop and mobile traffic arises as another. And while mobile seems to have resumed growth in January, this once again exerts downward pressure on our Brand Advertising estimates. Additionally, given the push to aggressively invest in marketing to drive growth, YELP offered below-consensus EBITDA guidance although revenue forecasts were ahead of expectations. We hence expect YELP shares to be pressured near term but are buyers on the pullback as we do not believe our investment thesis is impaired in any way.”

Cantor Fitzgerald - Buy, $76 price target

“International a big opportunity, but revenue contribution remains stubbornly small. With the launch of five new markets in 2014, Yelp is now in 29 countries, yet international contributed only ~3 percent of total revenue in 4Q:14. Management expects international to be a significant opportunity over time, but believes that it will take several years for it to grow materially as a percentage of revenue given strong growth in the United States.”

Brean Capital - Hold, no price target

“While 4Q14 sales and adjusted EBITDA beat expectations, full-year 2015 adjusted EBITDA guidance was much lower than the consensus figure due to plans to ramp marketing spending and expand its sales force. We are reiterating our Hold rating and continue to monitor the impact on sales and EBITDA from its Yelp Platform efforts before recommending purchase of the shares.”