Yelp (YELP – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst yesterday. Analyst Nitin Bansal from Bank of America Securities reiterated a Sell rating on the stock and has a $34.00 price target.
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Nitin Bansal has given his Sell rating due to a combination of factors impacting Yelp’s outlook. Although Yelp did report higher than expected revenue and EBITDA for the fourth quarter, much of this was driven by seasonal factors, and the company’s guidance for the first quarter fell short of market expectations. This suggests ongoing challenges in maintaining consistent growth momentum.
Nitin Bansal also highlights potential concerns over fiscal year 2025 projections, which could either be conservative or indicative of a slowdown in Yelp’s organic growth within its services segment. Additionally, there is a noted decline in user engagement, with app usage decreasing and only slight increases in web traffic. The increasing importance of AI in advertising is another challenge, as it may widen Yelp’s return on investment gap and make the platform less appealing to advertisers. Despite a recent acquisition that could offer some revenue growth, Yelp’s core business faces structural issues, leading Bansal to maintain an underperform rating.