On Friday, Craig-Hallum raised the price target on Yelp (NYSE:YELP) shares to $48.00, up from the previous target of $44.00, while maintaining a Buy rating on the company's stock. The adjustment reflects the firm's optimism about Yelp's continued growth, particularly in its Home Services sector, which has been delivering mid-teens growth rates. The company's strong financial position is evidenced by its perfect Piotroski Score of 9, according to InvestingPro data, indicating robust operational efficiency and financial stability.
Jason Kreyer, an analyst at Craig-Hallum, noted that Yelp's investments in artificial intelligence, lead generation, and matching services have been yielding strong results. Despite facing macroeconomic pressures that have squeezed consumer spending, leading to a decline in revenue from the Restaurants, Retail & Other (RR&O) category since these pressures emerged a year ago, Yelp's overall services growth has been robust.
The company's guidance for the fiscal year 2025 indicates that the current trends are expected to persist, setting Yelp up for potential gains when consumer patterns improve. Kreyer's commentary highlighted that Yelp is well-positioned to achieve mid-single-digit revenue growth and double-digit earnings growth despite the ongoing consumer pressures.
The analyst expressed confidence in Yelp's ability to capitalize on an eventual macroeconomic upswing, especially with easier comparisons as the year 2025 progresses. The positive outlook is based on Yelp's solid execution and anticipated earnings per share (EPS) gains, which prompted the increase in the price target to $48.00.
In other recent news, Yelp Inc. reported a strong fourth quarter, with earnings per share reaching $0.62, exceeding analyst estimates of $0.53. The company's revenue for the same period was $361.95 million, surpassing the consensus estimate of $351.61 million. For the full year of 2024, Yelp achieved a record net revenue of $1.41 billion, a 6% increase year over year, with net income rising 34% to $133 million.
The company's robust performance was driven by its focus on its services roadmap, which led to an 11% increase in advertising revenue from services categories, reaching $879 million. However, advertising revenue from restaurant, retail, and other categories saw a 3% decrease year over year, totaling $470 million.
In terms of recent developments, Yelp provided a positive outlook for 2025, projecting net revenue between $1.47 billion and $1.485 billion, aligning with analyst consensus. Yelp's user base remained active, contributing 21 million new reviews in 2024, bringing the total to 308 million reviews. These results and projections underscore Yelp's strong execution of its product-led strategy and its ability to leverage AI to drive connections between consumers and service providers.
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