ECB Says It May Buy More Bonds; Yelp Coverage Starts
Europe recovering a bit, no doubt helped by European Central Bank Executive Board member Benoit Coeure, who said that the bank still had the option of buying Spanish government debt under its Securities Market Program.
Also helping: Alcoa, up 5 percent pre-open, which beat on top and bottom line. Importantly, while costs were higher, they were not as high as expected, and key parts of the sales were driven by strong demand in transportation and aerospace.
1) Help! Yelp analyst coverage starts with underwhelming endorsement. Oh sure, there is lots of talk about how Yelp is a "leading Internet destination" and other accolades, but look at what the recommendations are and the price targets compared to the current price of $25.81:
a) Oppenheimer initiates with "perform" and a 12 to 18 month price target of $23 (!); it notes the stock is trading at 9.2x estimated 2013 sales, the highest valuation among the consumer Internet universe;
b) Goldman with "neutral" and $26 price target, noting that the growth potential is "appropriately" reflected in the stock's current valuation;
c) Citi with "neutral" rating and a $28 price target, noting that they are not projected to be ebitda profitable until 2013 and that 50 percent of Yelp's traffic is driven by Google unbranded searches; and
d) Jefferies with a "hold" and a $23 price target, saying the stock is pricing in much of its near-term upside.
2) Is natural gas bottoming? Oil-to-natural-gas ratio is just about 50:1, near a record. There's certainly been attempts to make the rational trade: Short oil, go long natural gas. But it will take time to balance demand with the huge increase in supply from the warm weather. They are trying to balance things out: Rig count for natural gas has dropped dramatically. Much of that has gone into oil rigs. For anyone with a longer-term horizon, it seems like an obvious trade. The problem: You're either early, or you're wrong.
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