Credit Suisse Notes Yelp's Salesforce Growth Into First-Half Results

“We are positive on Yelp Inc YELP's leadership position as a leading destination for reviews/info on local businesses and like the recent trajectory of accelerating local ad rev. growth, upward est. revisions, and improving incremental EBITDA margins,” Credit Suisse’s Paul Bieber said, while initiating coverage on the company with an Outperform rating and price target of $47.

Investment Positives

The analyst also expressed appreciation for Yelp’s focus on national accounts, along with investments to drive app usage frequency and retrenchment from all international operations.

“As we look forward to 2017, we think monetization of "request a quote" represents compelling option value, and we think the 2H16 conversion of Class B shares to Class A could shine a light on Yelp's strategic asset value,” Bieber went on to say.

The analyst mentioned that some of the key investment positives for Yelp were that it was a leading destination for local business information and reviews, with robust execution and recent upward revision in expectations.

Salesforce Growth

Bieber also believes that “salesforce growth bodes well for local ad revenue growth in 1H17,” while noting that the company’s “emphasis on national accounts could make business less volatile, driving potential upside.”

The analyst believes Yelp has a long runway in taking share from U.S. directory and direct mail ad spend.

Among the investment concerns, Bieber listed increasing competition, difficult local ad revenue growth comps in Q1:17 and high SBC expenses, among others.