Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Evercore ISI has reduced its price target on Yelp (NYSE:YELP) to $37.00 from $44.00 while maintaining an "In Line" rating, citing macroeconomic headwinds affecting the company’s Services segment. The stock has fallen over 8% in the past week, now trading near its 52-week low of $30.85. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics.
The adjustment follows Yelp’s second-quarter results, which showed mixed performance with revenue of $370 million, up 8% year-over-year and 1% above Street expectations, while Adjusted EBITDA reached $100 million, increasing 10% year-over-year with a 27% margin that exceeded forecasts by 15%. The company maintains impressive gross profit margins of 90.6% and strong financial health, as evidenced by a robust current ratio of 3.27.
Despite the quarterly outperformance, Yelp narrowed its fiscal year 2025 outlook, lowering the high end of its revenue range as the company reported macro headwinds weighing on its Services fundamentals, compounding existing softness in its Restaurants, Retail & Other (RR&O) segment.
The quarter showed decelerating growth in key segments, with Services revenue slowing by 6 percentage points against a 1-point tougher comparison, while RR&O decelerated 1 percentage point despite facing an easier comparison period.
Evercore ISI noted that while management’s outlook likely contains an element of conservatism and the firm continues to view Yelp’s Services business as "inherently robust," the revised price target reflects lower 2025 exit revenue growth rate expectations, which impact the firm’s 2026 forecasts.
In other recent news, Yelp Inc. reported strong earnings for the second quarter of 2025, surpassing expectations. The company achieved an earnings per share (EPS) of $0.67, exceeding the forecasted $0.51 by 31.37%. Revenue also outperformed projections, coming in at $370.34 million against an expected $365.69 million. Despite these positive financial results, Yelp faced mixed reactions from analysts. Craig-Hallum reduced its price target for Yelp to $40 from $48, maintaining a Buy rating, citing growth opportunities in artificial intelligence and large language models. Meanwhile, BofA Securities lowered its price target to $30 from $31, maintaining an Underperform rating due to declining user engagement and structural challenges. These developments highlight the varied perspectives on Yelp’s future prospects amidst its recent earnings performance.
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