YELP
Yelp Inc.
$22.39
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 66.7% below fair value
You pay
$22.39
Bear
$61.52
Fair
$67.30
Bull
$73.61
Bear
$61.52
+174.8%
3% stage 1 growth, 11% discount
Fair
$67.30
+200.6%
4% stage 1 growth, 11% discount
Bull
$73.61
+228.8%
6% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
34%
Implied Market Multiple
3.0x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $28.40 from 67 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $67.30 per share.
Warnings
Wall Street's average price target is $28.40 (from 67 analysts). Our estimate is 211% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions