Buy Yelp (YELP) on Weakness, Needham & Company Says
Needham & Company analyst Kerry Rice cut his price target on Yelp (NYSE: YELP) to $80.00 (from $93.00) following Q3 results but maintained a Buy rating and said the sell-off creates a buying opportunity.
Rice commented, "We believe the sharp sell-off is a buying opportunity for investors looking to gain entry into a top Internet company. We see the sell-off as a result of a slight miss in 4Q14 revenue guidance and concerns that Yelp is not adding enough new customers to sustain its strong Local Advertising revenue growth. We believe investors are relying too heavily on active local business account and net customer growth given the metric is not tied to sales productivity, nor do we believe it provides a clear picture of the strength of the business. We view Local Advertising growth of 65% in 2014 as strong with only gradually slower growth in 2015 to 49% with likely upside to our growth estimates. Additionally, Yelp continues to expand margins."
The firm adjusted FY 2014 EPS from $0.06 to $0.07 and FY 2015 EPS from $0.26 to $0.21.
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Shares of Yelp closed at $70.23 yesterday.