Goldman Raises Its Price Target on Four Internet Stocks Due to Rising M&A Potential (YELP) (WBMD) (TRUE) (DMD)

Goldman Sachs increased its price target on Yelp (NYSE: YELP), WebMD Health Corp. (NASDAQ: WBMD), TrueCar (NASDAQ: TRUE), and Demand Media (NYSE: DMD). Changes reflect rising potential for M&A. Analyst HeathTerry said potential for additional M&A is increasing given high cash balances, increasing disparity in valuations, and growing benefits of scale.

"As the category leader in online local advertising, we believe Yelp’s robust local content, relationships with agencies/SMBs, and wide consumer reach could be valuable for online advertising and travel companies. Our 12- month price target goes to $78 from $74 on an 85%/15% blend of 11X 2015E EV/EBITDA (unchanged) and M&A premium at 15X 2015E EV/Sales ($100).," said Terry.

"We believe WebMD could be attractive to traditional healthcare companies or online advertising conglomerates with its $700mn in NOLs, wide consumer and medical professional reach, and brand value. Our 12-month price target goes to $47 from $46, on an 85%/15% blend of 14X 2015E EV/EBITDA (unchanged) and M&A premium at 5X 2015E EV/Sales ($53)," he added.

Regarding TrueCar, he said, "TrueCar is the online auto platform closest to the transaction and, with its dealer integrations, a combination with several in the autos ecosystem could prove synergistic. Our 12-month price target goes to $19 from $17, based on an 85%/15% blend of 50X 2015E EV/EBITDA (unchanged) and M&A at 10X 2015E EV/Sales ($32)."

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 $82.39 yesterday.

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