Yelp received multiple price target increases and at least one upgrade following last night’s revenue beat. Management also raised their guidance, which only added to Wall Street’s excitement even more. Despite the solid beat and raise quarter, most analysts remain Neutral-rated on Yelp, although they raised their price targets.

Yelp Earnings

Yelp’s valuation reflects growth trajectory

Wedbush analyst Aaron Turner maintained his Neutral rating on the company but raised his price target from $30 to $35 per share. He likes the current growth trajectory Yelp is on but feels that the current valuation fully reflects that growth.

Local ad revenue drove the company’s beat as total revenue grew 38% year over year, excluding Brand revenue, to $173.4 million to beat the consensus of $169.8 million. Local ad revenue also beat expectations, coming in at $151.9 million, against the consensus of $147.9 million and guidance of $167 million to $171 million. Management guided for EBITDA to be between $24 million and $28 million and net revenues to between $180 million and $184 million. They also upped their revenue guide to between $700 million and $708 million from $690 million to $702 million.

Turner continues to expect Yelp to face headwinds to growth due to rising competition from bigger players in the tech industry, although he notes that the company has done well standing up against them so far. He is concerned about decelerating traffic numbers, however, as he believes Google is stepping up efforts to push Yelp’s results out of its search engine queries.

Baird and Susquehanna analysts also upped their price targets for Yelp, although they also remain on the sidelines. Baird’s target moves from $25 to $35 per share, while Susquehanna’s target now stands at $35 from $22 per share.

Mizuho Securities upgrades Yelp

Mizuho Securities analyst Neil Doshi upgraded Yelp from Neutral to Buy and raised his price target from $24 to $40 per share following last night’s print. He cited several reasons to become more positive on the company. One is stabilization in the growth of the core local ad business’ revenue, and another is the improved outlook for EBITDA margins.

He also noted that comparisons for the second half of the year will be easier for the second half of the year and that Yelp will benefit from new revenue growth opportunities such as National accounts. He believes the company’s multiple should continue to expand as he projects a 40% increase in revenue and more than 50% increase in EBITDA this year.

RBC Capital Markets analyst Mark Mahaney remains in the bull camp on Yelp. He reiterated his Outperform rating and raised his target from $36 to $48 per share.

Yelp shares surged by more than 13% to as high as $37.03 during regular trading hours on Wednesday.

Tags: