Online review site, Yelp Inc (NYSE:YELP) is expected to report strong first quarter earnings results on Wednesday by analysts at Cantor Fitzgerald Equity Research. The analysts anticipated that the company will post a 74 percent year-over-year increase in local ad revenue, relatively consistent with its performance in the previous quarters.

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Cantor Fitzgerald analysts Youssef Squali, Naven Khan, and Kip Paulson noted that Yelp Inc (NYSE:YELP) is positioned to benefit primarily from the massive local online advertising opportunity because the number of players with scale, brand, network effect, and solid execution are limited.

Paulson and his fellow analysts projected a Yelp Inc (NYSE:YELP) earnings performance of $44.7 million revenue (+632% Y/Y) and $1.4 million EBITDA (3.2 percent margin). The consensus estimate of Wall Street analysts were $44.5 million revenue and $1.5 million EBITDA based on data from FactSet.

Yelp Inc (NYSE:YELP) earnings guidance for the current quarter is in the range of $44 million to $44.5 million revenue and $1.25 million to $1.5 million EBITDA.

The analysts expected that company’s local advertising revenue will be around $37.29 million, which accounts 83.4 percent of Yelp Inc (NYSE:YELP)’s total revenue and represents 44 thousand active local businesses by the end of the quarter. According to them, the sequential average revenue per local business is approximately ~$892.

Paulson and his colleagues estimated that branded ad revenues will increase 27.8 percent year-over-year to $5.10 million (11.4 percent of total revenue). In terms of mobile revenue, the analysts cited that Yelp Inc (NYSE:YELP) still needs to break out in this category and they will closely monitor if it will be able to close the monetization usage gap.

In a note to investors, the analysts wrote, “We continue to see Yelp as a differentiated platform that is ideally positioned to benefit from rapid growth in mobile and local advertising. Yelp’s brand, scale, network effect, and first-mover advantage are a strong differentiators that should prove hard to replicate.”

The analysts recommended a buy rating and $27 price target for shares of Yelp Inc (NYSE:YELP). According to them, the stock is not cheap because it is trading at 7.5x at EV/ revenue based on FY13 estimates or 5.2x EV/revenue based on FY14 estimates. They said, the company’s “outside growth rate and margin potential” are the reasons behind their positive conviction for the company over the long-term. Their price target is based on a five year DCF and represents 7.7x revenue.

According to Paulson and his fellow analysts, Yelp Inc (NYSE:YELP)’s risk is the competition in local advertising from Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB), and its dependence on the search engine giant for traffic generation.

Yelp’s Stock

Stock of Yelp Inc (NYSE:YELP) is trading around $25.41 per share, down by more than 2 percent on Wednesday 10:30 AM in New York.