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RBC Upgrades Yelp After Solid Q3 Beat

Jayson Derrick
·2 min read

Yelp Inc (NYSE: YELP) reported third-quarter results that "solidly" beat expectations and investors should be positive on the stock, according to RBC Capital Markets.

The Analyst: Mark Mahaney upgraded Yelp's stock from Sector Perform to Outperform with a $29 price target.

The Thesis: Yelp's total third-quarter revenue of $221 million and Ad revenue of $212 million beat RBC's expectations of $200 million and $194 million, respectively. Also, Self-serve and Home & Local showed positive year-over-year growth while Paying Advertising locations notably improved by 130,000 quarter-over-quarter.

Total EBITDA of $52.7 million was also "well above" the Street's estimate of $11 million.

"We are starting to see the impact of early signs of recovery and reopening of the economy on Yelp's business," the analyst wrote in a note.

View more earnings on YELP

Related Link: Why These Companies Could Benefit From Google's Antitrust Lawsuit

Yelp is also considered a "vaccine stock" which means the company will notably benefit from the release of a COVID-19 vaccine as foot traffic for businesses on its platform picks up.

Finally, Yelp's stock is down 36% since the start of 2020 versus the Nasdaq's index that is up 32.5% over the same time period. While the underperformance may be justified given a notable revenue decline in the second quarter, the "worst is behind" Yelp.

YELP Price Action: Yelp's stock traded higher by 7.7% to $23.71 at publication time.

Photo credit: Nan Palmero, Flickr

Latest Ratings for YELP

Date

Firm

Action

From

To

Nov 2020

Credit Suisse

Maintains

Outperform

Nov 2020

BMO Capital

Maintains

Market Perform

Nov 2020

RBC Capital

Upgrades

Sector Perform

Outperform

View More Analyst Ratings for YELP
View the Latest Analyst Ratings

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