YELP
Yelp Inc.
$26.36
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 60.2% below fair value
You pay
$26.36
Bear
$61.60
Fair
$66.15
Bull
$71.91
Bear
$61.60
+133.7%
3% stage 1 growth, 11% discount
Fair
$66.15
+151.0%
4% stage 1 growth, 11% discount
Bull
$71.91
+172.8%
5% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (4% base case)
Terminal Value % of EV
34%
Implied Market Multiple
3.6x
Market is pricing in (growth)
-16.6%
vs 4.0% base
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 $27.33 from 67 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $66.15 per share.
Warnings
Wall Street's average price target is $27.33 (from 67 analysts). Our estimate is 219% 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