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Oppenheimer Takes 'Wait and See' Stance on Yelp: Analyst

It's not every day all four banks that helped fund an initial public offering come out with less than superlative ratings on that company, but that's what's happened with daily-deal site Yelp.

Two of the underwriters — Citigroup and Goldman Sachs — rate the company at "neutral" while Oppenheimer has a "perform" rating. Jefferies rates it a "hold." Price targets range from $23 by Jefferies, to $26 by Goldman and $28 by Citigroup.

Oppenheimer has a $23 target because Yelp is the most expensive stock within the Internet sector, having risen 72 percent since its IPO, senior analyst Jason Helfstein told CNBC Wednesday.

"We think it’s a terrific company," he stressed. "But at the end of the day it’s a very expensive stock and the company hasn’t given any type of public guidance yet…For anybody that bought the deal, it’s kind of take a wait and see approach at this point."

Part of the problem is Yelp's business model, with its revenue based on "subscriptions" by advertisers. Right now "only 4 percent of the advertisers listed on the site pay to advertise. So average spending per advertiser is $2,400, or 25 percent below what the average is" compared with other local online advertising such as the Yellow Pages.

"The issue isn’t just penetration because the company is new. They’ve only convinced 4 percent of their available advertisers to actually pay," he added. "We think that’s a pretty low number."

Still, Oppenhemier is forecasting 41 percent revenue growth for Yelp "but we think a lot of that enthusiasm is going to be priced into the shares at these levels."

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Trader disclosure: On Apr 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long AAPL; Jon Najarian is long GS; Jon Najarian is long INTC; Jon Najarian is long IBM; Jon Najarian is long HFC; Jon Najarian is long WNR; Jon Najarian is long RIMM; Jon Najarian is long SBUX; Jon Najarian is long RIG; Jon Najarian is long FSLR; Jon Najarian is long TSL ; Jon Najarian is long THOR; Jon Najarian is long CME; Jon Najarian is long CBOE; Jon Najarian is long CIGX; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long COP; Steven Weiss is long JPM; Steven Weiss is long CSC; Steven Weiss is long BRCM; Steven Weiss is long JPM; Steven Weiss is long BAC; Steven Weiss is short AAPL SHORT PUTS

For Abigail Doolittle
Nothing to disclose

For Jason Helfstein
Oppenheimer & Co. Inc. makes a market in the securities of YELP
Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3 months from YELP and YELP1
In the past 12 months Oppenheimer & Co. Inc. has received compensation for investment banking services from YELP and YELP1
In the past 12 months Oppenheimer & Co. Inc. has managed or co-managed a public offering of securities for YELP and YELP1
In the past 12 months Oppenheimer & Co. Inc. has provided investment banking services for YELP and YELP1

For Daniel Ives
Nothing to disclose



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