Deutsche Bank's Contrarian Post-Earnings Yelp View
Yelp Inc (NYSE: YELP) is down sharply, falling more than 20 percent after the company said that earnings will be impacted by investments in marketing and hiring sales staff.
Deutsche Bank analysts said the pressure is “overdone.” Deutsche Bank’s view reflects the idea that the company is a monetization story, not a traffic growth story and that profitability ex-advertising investments will be healthy.
Deutsche Bank has a price target of $70 on Yelp, down from $75 estimate prior and reflecting the lower EBITDA estimates moving forward. However, despite lower profits, revenues, cost-per-clicks and local continue to be a bright spot.
The analysts outline key risks as increased competition, dependency on Google for traffic, and failures to ramp up transaction business, to monetize international traffic and macroeconomic risks.
Shares of Yelp traded recently at $45.46, down 20.9 percent.
Latest Ratings for YELP
Feb 2015 | Citigroup | Maintains | Buy | |
Feb 2015 | CRT Capital | Maintains | Buy | |
Feb 2015 | JP Morgan | Maintains | Overweight |
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