Biz Break: Yelp gets a good review from Deutsche Bank analyst

Top Of The Order:  

Yelp, There You Go: If you had bought stock in Yelp a year ago, well, you wouldn’t be giving the company’s market’s performance a very good review. That’s because Yelp’s shares have fallen 37 percent from a year ago, to close Monday at $28.44. Even if you had gotten in on some Yelp action at the end of 2015 (the stock finished the year at $28.80), you wouldn’t have a lot to celebrate, unless you count basically breaking even as reason to pop some Champagne corks.

But, there might be a chance that Yelp could be back on the rise. At least that’s the opinion of Deutsche Bank analyst Lloyd Walmsley.

Before the stock market opened Monday, Walmsley raised his rating on Yelp to buy from hold, and increased his price target on the online review and recommendation company’s shares to $33 from $26. Yes, that’s not where Yelp’s shares were a year ago, but getting there would have to restore at least some faith in Yelp’s direction.

Walmsley said there are three signs that Yelp is getting on track.

  • Improved productivity from the company’s salesforce. Walmsley said Yelp’s salesforce has stabilized after a raft of departures in early 2015 that included many veteran staffers leaving the company.
  • Improvements in ad units, especially those involving national advertisers placing ads in local markets.
  • A new Chief Financial Officer, Lanny Baker, who joined Yelp in May after serving as Chief Executive of ZipRealty, an online real estate site.

“Much work remains, certainly, to unlock the full potential of the Yelp platform, and competition remains fierce from much larger players including Google and Facebook,” Walmsley said in a research note. “Nonetheless, we see the risk (and) reward as far more favorable for Yelp.”

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The potential for stability, and moving forward, would be a relief to investors who have weathered what has been a year of upheaval at Yelp.

Remember the brouhaha that lasted for about a week earlier this year when an employee of Yelp’s Eat24 business penned a long screed directed at Yelp Chief Executive Jeremy Stoppelman about how she was barely able to get by on her salary? And remember how she got fired just after that post? There was also the surprise resignation of CFO Ron Krolik and a disappointing quarterly report in February. Oh, and there were also reports that Yelp was exploring selling itself.

If Yelp can put all of that behind itself and prove Walmsley’s expectations right, the company might end up getting a good review from Wall Street in the months to come. If not, you can bet Yelp’s stockholders will deliver their feelings in the form of selling more of the company’s shares.

Middle Innings:

Apple Loses Weight(ing): Apple appears headed toward losing some of its weighting in the popular Russell 1000 stock index due to a recent loss in market capitalization and fewer shares on the market. Many fund managers tie the amount of specific stocks in their own funds to the Russell index, and less Apple in the Russell 1000 would, in theory, result in fund managers selling some of their Apple holdings to maintain a matching percentage to the Russell index.

And How Many Loonies Is That: HP Inc., the part of Hewlett-Packard that took on the PC and printing technology business after the old HP split last year, sold some more software to Canadian software company OpenText. In fact, HP sold its customer management software business to OpenText for $315 million. It was the second time this year that HP sold some of its software offerings to OpenText, after that company paid $170 million in April for set of HP’s software tools used in content management.

Bottom Of The Lineup:

Here’s a look at how some leading Silicon Valley stocks did Monday…

Movin’ On Up: In addition to Yelp, and its gain of 5.7 percent, Barracuda Networks, NeoPhotonics, Chegg and Form Factor also advanced.

In The Red: Cypress Semiconductor shares fell more than 4 percent, and losses also came from Infinera, AMD, Inphi and Servicesource International.

The tech-focused Nasdaq Composite Index rose 0.8 percent to 4,837.

The blue chip Dow Jones Industrial Average climbed by 0.7 percent to 17,804.

And the broad-based Standard & Poor’s 500 Index added 0.6 percent to close at 2,083.

Quote Of The Day: “I’m going to take a really long nap,” LeBron James, upon returning home to Akron, Ohio after leading the Cleveland Cavaliers to the NBA title over the Golden State Warriors on Sunday.

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Photo: Employees leave the Yelp offices in San Francisco in June 2014. (Karl Mondon/Bay Area News Group)


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