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Yelp (YELP) Given a Boost by JPMorgan

Updated from 9:09am EST to include updated share prices by market open. 

NEW YORK (TheStreet) -- Yelp (YELP) is seeing gains in morning trading Wednesday after JPMorgan revised its price target. 

In a research report, the investment bank said shares could reach $89, as studies show strong local ad coverage and deal demand. 

By mid-morning, shares had risen 8.2% to $78.64. 

TheStreet Ratings team, however, rates YELP INC as a Sell with a ratings score of D+. The team has this to say about their recommendation:

"We rate YELP INC (YELP) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has decreased by 15.5% when compared to the same quarter one year ago, dropping from -$2.01 million to -$2.32 million.
  • YELP INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, YELP INC reported poor results of -$0.30 versus -$0.15 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.30).
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, YELP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for YELP INC is currently very high, coming in at 93.01%. Regardless of YELP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YELP's net profit margin of -3.79% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly increased by 882.30% to $6.99 million when compared to the same quarter last year. In addition, YELP INC has also vastly surpassed the industry average cash flow growth rate of 23.71%.

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