Analysts Like Yelp's Treasure Trove, Even If The Company May Never Get Bought Out

Shares of Yelp Inc YELP fell 2.4 percent on Monday trading, ahead of the announcement of the company’s second quarter financial results, scheduled for after the market closes on Tuesday.

According to Estimize, experts are modeling consensus earnings of $0.01 per share (down 75 percent year-over-year) on revenue of $133.2 million, versus guidance of $132.5 million. Let’s take a look at what four major Wall Street research firms are saying before the earnings call.

Topeka Capital Markets

Topeka’s Blake T. Harper is modeling earnings of $0.18 per share on sales of $133.1 million. The analyst maintains a Buy rating and $60.00 price target on the stock. Buy, why is he so bullish?

In a recent report, the firm notes that “Yelp has a valuable trove of information and user-generated reviews on local businesses and an efficient telesalesforce that monetizes that content with performance based and impression based advertising packages.”

Increasing transactions and an expanding sales force can drive substantial growth in its Local Advertising revenues, Topeka notes. Other elements contributing to incremental upside are YP partnership and Eat24.

The analysts concludes that, “With expectations and valuation reset to lower levels,” investors can expect the stock to react favorably to the company's growth.

Piper Jaffray

Piper’s Gene Munster for his part, is less optimistic, and maintains a Neutral rating and $40.00 price target on the stock, as he thinks the company is “still one quarter away from fundamentals stabilizing.”

The analyst and his team are modeling earnings of $0.00 for the second quarter, on revenue of $133.4 million. They believe “user growth will reaccelerate in the fall and investor sentiment will likely shift back to positive at that time,” but remain on the sidelines for now on a lack of near-term catalysts.

Brean Capital

For his part, Tom Forte of Brean Capital maintains a Buy rating and $58.00 target price on Yelp shares. He anticipates EPS of $0.02 and EBITDA of $23.2 million for the second quarter.

The analyst comments on the speculation regarding the sale of the company. “For sale or not, we believe shares of Yelp are worth a lot more than current levels and recommend investors purchase shares,” a recent report assures.

Cowen and Company

Cowen analysts Kevin Kopelman and Andrew Marok rate Yelp’s stock as an Outperform case, and set a price target of $55.00. According to a report issued a couple of weeks ago, recent data “debunks the theory that Yelp traffic was meaningfully hurt by recent Google algorithm changes. US visitors were approx. flat m/m (+20% y/y) at 103M across all platforms in June, and US time spent was +4% m/m to 1.1B mins (comScore).”

The firm sees revenue, and not visitors, as the focus for the second quarter earnings call, and note the stock trades at a 35-50 percent discount to peers on an EV/S basis, despite its organic growth rate of roughly 40 percent.