Yelp Stock Slumps As Analysts Praise Facebook And Google

Shares of Yelp Inc. (NYSE:YELP) were down more than 2% in morning trading Thursday after the online review site was downgraded by analysts at Piper Jaffray amid concerns over growing competition from internet giants.

“We believe Yelp's strategic value is declining alongside the relative importance of long-form reviews as consumers increasingly depend on short-form information from social, search and maps for local businesses,” wrote Piper Jaffray’s Sam Kemp.

Kemp went on to note that Facebook (NASDAQ:FB) and Alphabet’s (NASDAQ:GOOGL) Google have both bolstered their local services recently. Google has integrated its Photos and Maps applications into its public reviews, and Facebook has added a variety of new reviewing formats and food ordering partnerships (also read: Facebook's Food Order and Delivery Services to Boost Growth).

Meanwhile, Yelp has attempted to force users onto its mobile application by limiting the amount of content that is available on its mobile website. Kemp described this as an effort to “impair” the web experience and argued the decision has shown “no signs of improving sales productivity.”

Piper Jaffray downgraded Yelp to “underweight” from “neutral” and lowered its price target for the stock to $37 from $38. The firm’s new call would represent an 11.7% slump from Wednesday’s closing price.

Heading into the day, shares of Yelp were up just 9.8% on the year. Nevertheless, investors were beginning to gain optimism after the company posted a surprise profit and crushed earnings estimates by over 1,000% in its most recent quarter.

For the upcoming fiscal year, Yelp is expected to witness earnings growth of 98% and revenue growth 12.4%. Still, the stock remains a Zacks Rank #3 (Hold).

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

Zacks' Hidden Trades

While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?

Starting today, and for the next month, you can follow all Zacks’ private buys and sells in real time. Our experts cover all kinds of trades: value, momentum, ETFs, stocks under $10, stocks that corporate insiders are buying up, and companies that are about to report positive earnings surprises. You can even look inside portfolios so exclusive that they are normally closed to new investors.

Click here for Zacks' secret trade>>