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Roth Reiterates Sell Rating Ahead Of Yelp's Q1 Earnings

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Yelp Inc (NYSE: YELP) is scheduled to announce Q1 results after the market closes on Thursday. Ahead of the report, Roth Capital analyst Darren Aftahi reiterated a Sell rating and $12.50 price target on shares citing “negative operating leverage and decelerating local sales and mobile user growth.”

If, as the firm’s experts anticipate, Q1 results are in-line with expectations, it would mark the third consecutive quarter showing the aforementioned trends. But it's not only the negative operating leverage and slowing sales that worry the analysts. They have also declared being skeptical of the EBITDA ramp implied for the second half of the year, especially as competitors like Facebook Inc (NASDAQ: FB) “have clearly gotten more aggressive in the space recently.”

Having explained his bearish stance towards Yelp, Aftahi and his team are modeling a first quarter net loss of $(0.21) on revenue of $156.8 million and adjusted EBITDA of $11.3 million. These estimates compare to a consensus of $(0.16) $155.6 million and $11.5 million, respectively.

Looking at other relevant metrics, the firm is anticipating:

  • Total local advertising revenue of roughly $132.1 million, up 34 percent year-over-year, slowing from a 51 percent surge seen a year ago.
  • 88.4 million Total Mobile Unique Visitors, up 12 percent year-over-year, but also slower than last year’s 29 percent rate.
  • 66.4 million mobile web uniques
  • 22 million mobile app users, 37 percent year-over-year.
  • 117,000 local advertising accounts, with roughly 6,000 quarterly additions, flat year-over-year.
  • Cash flow from operations of $13.9 million, down from last year’s $25.6 million.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for YELP

DateFirmActionFromTo
Apr 2019Initiates Coverage OnOutperform
Feb 2019MaintainsBuyBuy
Feb 2019MaintainsOutperformOutperform

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