Yelp stock price target lowered to $38 by Goldman Sachs on mixed outlook

Investing.com - Goldman Sachs has lowered its price target on Yelp (NYSE:YELP) to $38.00 from $40.00 while maintaining a Neutral rating following the company’s second-quarter 2025 earnings report. According to InvestingPro analysis, Yelp is currently trading near its 52-week low at $34.18, with data suggesting the stock is undervalued based on its Fair Value assessment.

The firm noted that Yelp delivered "an overall solid reported Q2 revenue quarter" led by its Services segment, though management indicated volatility throughout the quarter with soft early growth that improved by quarter-end but didn’t reach typical seasonal levels. The company maintains impressive financial metrics, including a 90.88% gross profit margin and an overall "GREAT" financial health score of 3.43 according to InvestingPro analysis.

Goldman Sachs highlighted positive developments in Yelp’s Services business, which maintained healthy Request-a-Quote projects despite challenging comparisons and economic uncertainty, alongside steady progress in scaling multi-location services professionals.

The research note also pointed to Yelp’s growing artificial intelligence opportunity, with AI API calls increasing 20 times over the past year and more than 10 times in the past two months, while licensing revenues have scaled to a $10 million annualized run rate over the last two months.

Despite these positive signals, Goldman Sachs cited management’s cautious outlook for the second half of 2025, with continued macroeconomic uncertainty weighing on RR&O growth and guidance for reduced incremental margins, though management maintains a disciplined approach to investments and capital allocation with continued focus on share buybacks.

In other recent news, Yelp Inc. reported second-quarter results that exceeded expectations. The company announced adjusted earnings per share of $0.67, surpassing the analyst estimate of $0.51. Revenue for the quarter reached a record $370.4 million, which was higher than the consensus estimate of $365.7 million, marking a 3.7% increase year-over-year. Despite these positive results, Yelp issued third-quarter guidance that disappointed investors. The company projected revenue between $1.465 billion and $1.475 billion, which fell short of the $1.54 billion analysts had anticipated. This guidance led to concerns among investors about future performance. These developments highlight the mixed reactions to Yelp’s recent financial disclosures.

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