Cantor Cuts Yelp Inc. Price Target On Following In-Line 4Q:14 Results And Mixed Guidance


In a research report sent to investors this morning, Cantor analyst Youssef Squali maintained a Buy rating on Yelp Inc. (NYSE:YELP), but reduced the price target to $76 (from $83), which still represents a potential upside of 32% from where the stock is currently trading.

The report follows the company’s fourth-quarter results, posting revenue of $109.9M and adj. EBITDA of $25.1M vs. consensus at $108.4M and $24.5M, respectively. However, For FY:15, management is guiding to revenue of $538-543M and EBITDA of $100-103M vs. consensus’ $539M and $120.5M, respectively. The lower-than-expected EBITDA outlook is a result of management’s plans to increase marketing investment by $20M, aimed at growing brand awareness, and sales headcount by 40% in 2015.

Squali noted, “Local ad revenue were strong, driven by local business additions and pricing. 2015 EBITDA guidance, which came in below consensus, reflects an increase in marketing spend, and a 40% jump in sales headcount. The local online ad opportunity remains sizeable, and the number of players with scale, brand, network effect and solid execution is very limited, positioning Yelp as a prime beneficiary, in our view.”

Yelp Inc. operates as an online local guide that connects people primarily with boutiques, mechanics, restaurants, and dentists.