The firm called the online business reviewer an "underappreciated core franchise."
Competitive uncertainties regarding Yelp's relevance are overblown, "while self-serve's ease and utility are underappreciated," Pacific Crest analyst Brad Erickson wrote.
Self-serve is Yelp's platform that allows businesses to manage their own advertising.
The company is well positioned to attract a part of the more than $60 billion in local ad spending that is shifting online, he added.
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