Yelp (NYSE:YELP) is building even on strong postmarket moves from last night, up 27.5% and back to its highest point in six months, as analysts react to its divestiture of Eat24 and a Q2 beat-and-raise.
A bullish price target comes from MKM, which raised to $48 from $27 (implying 17% upside from today's jacked-up price) and upgrades to Buy. Eat24 is selling for more than twice what Yelp paid, and it gets "much higher transaction volume than YELP could drive on its own" in the deal.
Needham reiterated its Buy and raised its price target to $43 from $30. The Eat24 sale should reduce costs and drive activity on the platform, says analyst Kerry Rice. The company can deliver 20% revenue growth and increased profits with "several revenue growth levers to still pull, including improvements in retention, monetization, sales productivity, as well as ongoing growth in Self-Service and National advertising and marketing optimization."
Morgan Stanley's staying Neutral but says the Eat24 sale should benefit monetization considering 80% of Yelp users still don't know you can order food on the platform, Brian Nowak says: Cash flow per order should get better, restaurant selection will improve by 88% (~75k restaurants at GRUB vs ~40k at Yelp previously), and YELP will be able to invest more in its core business and customer acquisition.
Now read: Yelp - It's Overvalued »
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