Yelp (YELP) PT Raised to $55 at RBC Capital on Robust Local Advertising

November 2, 2016 12:16 PM EDT
Get Alerts YELP Hot Sheet
Price: $36.31 -0.49%

Rating Summary:
    19 Buy, 22 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 16 | Down: 26 | New: 28
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RBC Capital analyst Mark Mahaney reiterated an Outperform rating and raised his price target on Yelp (NYSE: YELP) to $55.00 (from $48.00) after the company posted another beat and raise quarter, with the Local Advertising segment sustaining a very robust 41% Y/Y growth.

Mahaney highlighted:

1) Local Ad Revenue Growth – 3rd consecutive quarter of 40%+ Y/Y growth, driven by a confluence of factors – salesforce growth acceleration, $50MM brand advertising campaign, ad product improvements…

2) Very Robust Organic Rev Growth – Of 38% Y/Y (same as Q2), which excludes the loss of the brand advertising biz.

3) Local Advertising Account Adds – Up 6.6K Q/Q to 135,000, with the Net Adds down modestly compared to Q3:15 and Q2:16.

4) Stable Visitor Growth – Stable and robust App Unique Devices growth of 24% Y/Y and Mobile App growth is the Moatiest growth Yelp can have… Also, Yelp seeing no major impact from recent Google Algo change.

5) Very Strong Adjusted EBITDA Margin Results – 18% in Q3 is highest since 2014, with the incremental 50% Margin supporting the company’s l-t goal of 35%-40% Margins.

6) YELP Cutting Back Its International Presence – $2-$4MM restructuring cost in Q4. We view as long-term negative, but medium-term understandable, given very limited traction to date.

The firm's ’17 Revenue/Adjusted EBITDA increased 3%/7% to $930MM/$183MM.

For an analyst ratings summary and ratings history on Yelp click here. For more ratings news on Yelp click here.

Shares of Yelp closed at $32.48 yesterday.



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RBC Capital, Mark Mahaney

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