Market Overview

KeyBanc's Bullish Stance Unchanged After Yelp's Q4 Report

Share:
KeyBanc's Bullish Stance Unchanged After Yelp's Q4 Report
Related YELP
77 Biggest Movers From Yesterday
Mid-Afternoon Market Update: Yelp Jumps Following Strong Q2 Earnings; e.l.f. Beauty Shares Slide

Yelp Inc (NYSE: YELP) reported fourth quarter results that fell short of what Wall Street expected, but at least one analyst says his bullish thesis is unchanged.

The Analyst

KeyBanc Capital Markets' Brad Erickson maintains an Outperform rating on Yelp's stock with an unchanged $54 price target.

The Thesis

Despite an earnings miss in the fourth quarter, Yelp showed its execution improved in terms of local ad retention, Erickson said a note. The company's in-line EBITDA during the fourth quarter and disappointing guidance for 2018 should signal the company "had extra margin" to hire more aggressively and demonstrates that churn is "under control."

Excluding a $16.5 million incremental loss year-over-year on Nowait, Yelp Reservations and Yelp Wi-Fi, the company's guidance EBITDA guidance would be around $197 million which would be in-line with the Street's estimates. Excluding the $10 million of the Eat24 benefit in the quarter, Yelp's contribution margins would have still improved by 200 basis points year-over-year.

The main takeaway from Yelp's report is that the local ad business remains undervalued, Erickson said. Looking forward to the full year 2018, it would be reasonable to assume that management's guidance is at the very least achievable if not conservative as it implies little Eat24 growth and no material RAQ (Request A Quote) contribution.

Price Action

Shares of Yelp lost more than 7 percent Thursday.

Related Links:

5 Biggest Price Target Changes For Thursday

Yelp Gets Nailed With A Bad Review: Piper Jaffray Downgrades

Image credit: Nan Palmero, Flickr

Latest Ratings for YELP

DateFirmActionFromTo
Aug 2018BarclaysMaintainsEqual-WeightEqual-Weight
Aug 2018BairdMaintainsNeutralNeutral
Aug 2018JefferiesMaintainsBuyBuy

View More Analyst Ratings for YELP
View the Latest Analyst Ratings

Posted-In: Brad Erickson Eat24 KeyBanc Capital Markets NoWaitAnalyst Color Analyst Ratings Tech Best of Benzinga

 

Related Articles (YELP)

View Comments and Join the Discussion!

Reality Shares CEO Talks Blockchain ETF And The Technology's 'Massive Innovation'

Earnings Preview: Activision Blizzard To Report Q4 Results After The Close