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Investing.com - Evercore ISI has reiterated its "In Line" rating and $44.00 price target on Yelp (NYSE:YELP) ahead of the company’s second-quarter 2025 earnings report, scheduled for August 7. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.35, supported by impressive gross profit margins of 91%.
The research firm expects Yelp to deliver a "modest beat" on Q2 expectations, citing intra-quarter data points and model sensitivity analysis. Wall Street currently projects Q2 revenue growth of 2% year-over-year and 2% quarter-over-quarter, with an EBITDA margin of 24.0%. With the stock currently trading near its 52-week low at $33.67, InvestingPro analysis suggests the stock is undervalued, making it an interesting watch for value investors. Get deeper insights with InvestingPro’s comprehensive research report, available for over 1,400 US stocks.
Evercore notes that Yelp management has consistently reported revenue and EBITDA at or above the high end of guidance for more than eight consecutive quarters. While the company observed steady ad spend in April rather than a typical seasonal uptick, management indicated some encouraging signals in early May.
The firm believes investors will focus on continued momentum in Yelp’s Services segment, which grew 14% year-over-year in Q1 2025, marking its 16th consecutive quarter of double-digit expansion. Market participants will also watch for stabilization in Yelp’s restaurant, retail, and other categories, which declined 3% year-over-year in Q1 amid ongoing macroeconomic pressures.
Despite rising 9% after its Q1 earnings beat, Yelp’s stock has since retreated and is now trading 14% below its post-earnings price, with Evercore noting the company is trading near its trough price-to-earnings ratio. The current P/E ratio stands at 15.65, which appears attractive given the company’s solid fundamentals and growth prospects.
In other recent news, Yelp Inc. reported its first-quarter 2025 financial results, surpassing earnings expectations with an earnings per share (EPS) of $0.36, compared to the forecasted $0.33. The company’s revenue reached $359 million, an 8% increase year-over-year, which exceeded the anticipated $353.43 million and beat the management’s guidance of $350 to $355 million. Despite these positive results, Yelp has adjusted its revenue outlook due to rising macroeconomic uncertainties, narrowing the lower end of its forecast. Advertising spending remained strong, although the expected seasonal growth in April did not occur.
In terms of analyst activity, JPMorgan raised the price target for Yelp shares from $35 to $38, maintaining a Neutral rating. Conversely, BofA Securities lowered its price target for Yelp to $31 from $34, maintaining an Underperform rating. BofA cited anticipated lower growth in Yelp’s Services and Restaurants & Retail segments and increased costs as reasons for the adjustment. The firm also expects a slight decline in Yelp’s revenue for 2025 and a 9% reduction in GAAP earnings per share, reflecting a higher tax rate than previously anticipated. These recent developments provide investors with a nuanced view of Yelp’s current financial landscape.
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