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Summary

  • Goldman Sachs upgraded its rating on Yelp Inc. from ‘neutral’ to ‘buy’ on July 17, 2023.
  • The mean recommendation rating on YELP is 3.1 and the consensus mean price target on YELP is US$35.75.
  • The YELP stock price went up 11% on July 17, 2023, as it received a rating upgrade and higher price target from Goldman Sachs.

Yelp Inc. received a rating upgrade from Goldman Sachs on July 17, 2023, as per EODHD/Others data. The broker promoted YELP from ‘hold’ to ‘buy’ and increased its price target on YELP from US$38 to US$47.

Yelp is an advertising-based company that acts as a point of contact between corporations and consumers. The company provides advertising for companies as well as reviews and photos of products for consumers. The platform allows direct interaction of businesses and consumers in an online mode.

The rating upgrade from Goldman arrived at a time when the mean recommendation rating on the stock is 3.1 on a scale of one to five. Here, one represents a ‘strong buy’ rating and five represents a ‘strong sell’ rating. The consensus price target on YELP is US$35.75 as on July 17, 2023.

YELP closed at US$42.02 on Monday, July 17, 2023, jumping by 54% on a YTD basis. The stock hit its 52-week high of US$39.2 on October 26, 2022. 

Goldman’s price target higher than other analysts’

EODHD/Others data suggests that analysts had maintained price targets close to the stock’s closing price on Monday. Credit Suisse maintained an ‘outperform’ rating on YELP with a price target of US$43. Meanwhile, YELP’s closing price on Monday is already ahead of the price targets given by Wells Fargo and Evercore ISI, which were US$32 and US$40, respectively.  

Ten analysts have covered the stock, among which two have given it a ‘buy’ rating, five have given it a ‘hold’ rating and three have given it a ‘sell’ rating. None of the analysts have given the stock a ‘strong sell’ or ‘strong buy’ rating.

Goldman’s rating upgrade stands as an anomaly among this data. The broker not only renewed its rating on the stock but also raised its price target from US$38 to US$47.

YELP on track to post highest revenue since August 5, 2022

The rating upgrade by Goldman Sachs has led to the YELP stock price shooting by 11% on July 17, 2023. This marked the highest stock price jump in the history of the advertising company since August 6, 2021.

The brokerage believes that Yelp is set to benefit from a potential increase in advertising trends. Goldman also expects Yelp to have a steady margin expansion in the next five years, with revenue growth coming at high incremental margins. Additionally, it also expects higher revenue stemming from Yelp’s ad tech stack investment and other investment initiatives.

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The company reported that its net revenue during the first quarter 2023 increased by 13% based on strong demand for its advertising products. Meanwhile, its net loss remained consistent year-over-year at US$1 million and the adjusted EBITDA increased by 12% year-on-year to US$54 million in Q1 2023.