Yelp's Stock Surges After Analyst Upgrade

Yelp Inc.'s stock surged 4.6% in premarket trade Friday, after the online business review service was upgraded at RBC Capital, which cited a "highly attractive" risk-versus-reward investment scenario. Analyst Mark Mahaney raised his rating to outperform after being at sector perform for the last 6 1/2 months. He raised his stock price target to $42, which is 62% above Thursday's closing price of $25.90, from $34. That compares to his assessment of downside risk in the stock of 20%. Mahaney said he believes that after the stock "dramatically underperformed"--it had tumbled 53% year to date through Thursday while the S&P 500 has slipped 0.6%--valuations are now "very close to trough multiples." And following a meeting with management, he sees "unique core and strategic value" in the stock. "Overall, we still view Yelp has a top-of-funnel, strong-brand unique asset with downstream transaction capability," Mahaney wrote in a note to clients.