Bullish On Yelp's Eat24 Buy? These Analysts Are

On February 10, business review website Yelp Inc YELP announced in a press release that it acquired Eat24, a company that lets users order from nearby restaurants through its website or app. Yelp acquired Eat 24 for $134 million.

Eat24 currently offers its service from 20,000 restaurants. Yelp plans to increase that number to 1 million restaurants which will allow Yelp users to more easily connect with local businesses.

Related Link: Why Brean Likes Yelp

“As more food ordering transactions move online, further integrating Eat24 will enhance our user experience with an easy-to-use product and service that allows our large consumer audience to transact directly with businesses,” said Jeremy Stoppelman, Yelp co-founder and chief executive officer.

“Eat24 has developed a great solution and unique service that has already added great value to the Yelp Platform. With this acquisition, we gain more tools and expertise to help engage our users from discovery through transaction in a key vertical for Yelp.”

In addition, Yelp also raised its outlook for the first quarter of 2015, expecting revenue between $118.5 million to $120.5 million, up from its previous forecast of $114 million to $116 million.

According the SmarterAnalyst, RBC Capital analyst Mark Mahaney weighed in on Yelp on February 10 following its acquisition announcement, reiterating an Outperform rating on the stock with an $82 price target.

Mahaney noted, “We view this transaction as a logical acquisition to help Yelp move deeper down the funnel to close the loop, similar to the SeatMe transaction in July 2013. Eat24 is also a known asset to YELP, as it was already integrated into the Yelp platform, providing us with assurance of deeper due diligence and a clearer path to full integration. Yelp has similar partnerships with other food ordering/delivery services, such as Delivery.com.”

Overall, Mark Mahaney has a 66 percent success rate recommending stocks and a +22.2 percent average return per recommendation.

Similarly on February 10, Cantor Fitzgerald analyst Youssef Squali maintained a Buy rating on Yelp with a price target of $78 following the company’s acquisition announcement. He reasoned, “We view this deal favorably for Yelp, as it extends its reach with merchants, and helps it close the transaction loop for local businesses (mainly restaurant at this point). This transaction also gets Yelp closer to the ultimate customer.”

Youssef Squali currently has an overall success rate of 71 percent recommending stocks and a +25.3 percent average return per recommendation.

On average, the top analyst consensus for Yelp on TipRanks is Moderate Buy.