FBN Securities On Yelp: Strong Quarter, Weak Guidance Dampens Sentiment

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Shebly Seyrafi of FBN Securities commented on
Yelp's
YELP
third quarter results which were reported on Wednesday. Shares of Yelp tumbled on Thursday as Yelp reported third quarter earnings which according to Seyrafi was “another strong quarter” but was coupled with “weaker” guidance and several cautious warning signs. Unique visitors grew 19 percent in the third quarter after rising 27 percent in the second quarter and 41 percent a year ago. Seyrafi attributes the declining growth rate to a strong international growth which was offset by “more mature” growth domestically. Yelp is guiding its fourth quarter revenue to be $107 million $108 million, representing a 52 percent rise from a year ago which lags the 60 percent plus growth the company saw over the previous quarters. The company's revenue projection is in-line with the analyst's estimates but falls short of the $111 million consensus. Seyrafi did note Yelp improved its profitability in the third quarter, beating the consensus estimate while a fourth quarter EBITDA guidance of $24 million to $25 million is favorable relative to the consensus estimate of $24.1 million. Nevertheless, Seyrafi concludes that the negatives outweigh the positives. As such, the analyst lowered the price target on Yelp to $80 from a previous $100 while maintaining an Overweight rating.
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Posted In: NewsShebly Seyrafiyelp
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