Why These Analysts Believe YELP Can Succeed Against Negative Macroeconomic Winds

Online review aggregator Yelp Inc YELP released fourth-quarter earnings on Thursday, with very strong results that beat Street estimates.

The company also posted stronger-than-expected guidance for 2023 and according to KeyBanc analysts, Yelp is "continuing its trend toward growth through product innovation and disciplined investment."

The analysts didn't issue a price target for the company stock, currently valued at $33.14 and up 7.4% since the market closed on Thursday.

KeyBanc maintained its Sector Weight rating for Yelp.

Revenue for the fourth-quarter beat forecasts at $309 million against consensus estimates of $307 million. EBITDA of $80 million came in below consensus estimates of $81 million.

Following Yelp's positive results, KeyBanc increased projections for 2023 and 2024 revenue by 3% each year, "reflecting increased revenue per paying advertising location." That would put 2023 revenue at $1.3 billion and 2024 at $1.45 billion, per the firm.

EBITDA projections were raised by 3% for 2023 and 4% for 2024 to $300 million and $347 million, respectively.

Why KeyBanc Analysts Are Bullish On Yelp

The reasoning behind this change came from the fact that services advertiser demand remains robust: "Revenue posted double-digit growth for the seventh consecutive quarter," wrote the analysts. "We believe Yelp's investments in improving lead quality are manifesting in service providers spending more on the platform to drive revenue in a competitive market.”

The analysis firm also sees good progress against strategic initiatives. They describe Yelp’s four focal points as:

• Increasing quality leads and monetization in services.

• Driving sales through the most efficient channels.

• Delivering more value to advertisers.

• Enhancing the consumer experience.

"Collectively, we believe these help explain Yelp’s stronger-than-expected revenue guidance," they wrote.

Revenue guidance for 2023 was posted at between $1.29 billion and $1.31 billion, against prior street estimates of $1.29 billion.

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