Sterne Agee CRT Downgrades Yelp (YELP) to Neutral; Limited Visibility

Sterne Agee CRT downgraded Yelp (NYSE: YELP) from Buy to Neutral following weak Q1 results and limited visibility near-term.

Analyst Arvind Bhatia cited: 1) 1Q’15 revenue/EBITDA missed expectations and 2Q guidance is below expectations; 2) Recent cohort performance was below expectations; 3) international traffic continues to be flat despite Yelp’s expansion in additional countries, leading us to question the international opportunity; 4) Full year guidance assumes back-half re-acceleration but we feel visibility on that is limited.

"While we still believe the long-term opportunity for Yelp is large (management is guiding $1B in revenue for 2017 or 3-year CAGR of 38%) and its content and community are moats, we think the stock will likely struggle in the near term," Bhatia said.

The firm is reducing FY15 revenue / adjusted EBITDA estimates to $577M / $104M from $598M / $125M. They are reducing our FY16 revenue / adjusted EBITDA estimates to $793M / $167M from $864M / $201M.

For an analyst ratings summary and ratings history on Yelp click here. For more ratings news on Yelp click here.

Shares of Yelp closed at $51.28 yesterday.

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