This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Yelp Goes to $40

NEW YORK ( TheStreet) -- Yelp (YELP - Get Report) shares have been a big winner this year, gaining more than 80% year-to-date. One research firm thinks there's more upside from here.

Pacific Crest analyst Evan Wilson initiated coverage on the San Francisco-based Yelp, starting shares at "outperform" with a $40 price target. Wilson believes that Yelp, which provides users with reviews of local businesses, is poised to benefit from the coming boon in mobile advertising, with its 39 million user-based reviews. "The depth of its reviews is a very valuable commodity and difficult to replicate," Wilson wrote in the report. "Yelp's biggest innovation was combining a user review site with community features and a modern desktop and mobile interface."

The local advertising market is expected to surpass $100 billion in 2013, according to Borrell Associates, and that's precisely where Yelp plays. As a review site, it's able to attract local advertising, and since it's also a social network, it can benefit from mobile.

Wilson estimates that Yelp can do $224.5 million in revenue in fiscal 2013, up from $137.6 million in 2012. He believes revenue could reach as high as $330 million in 2014, noting Street estimates for the second half of 2013 and 2014 "look conservative."

Yelp was able to demonstrate strong year-on-year revenue growth, led primarily by advertising, in its most recent quarterly results. For the three months ended in March, Yelp's revenue rose 68% year over year to $46.1 million.

Yelp has been able to benefit from its relationship with Google (GOOG - Get Report), which integrates Yelp's results into its search engine, though it's still a detriment in the long run. According to Wilson, 37% of Yelp's traffic is derived from search, with 32% coming from Google. Wilson notes that as Yelp continues to build its brand and build out its mobile strategy, desktop traffic should continue to decline. Yelp is still very reliant on Google, which has its own review site, Zagat, and gives priority to it over Yelp.

"It is essentially squeezing out Yelp listings from the users' sight and from its search results," Wilson wrote in the report. "Google's influence could be a significant overhang on Yelp's traffic."

Shares of Yelp were higher in early Tuesday trading, up 3.03% to $35.05.

--Written by Chris Ciaccia in New York

>Contact by Email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GOOG $693.01 0.00%
YELP $21.00 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs