Bank of America sees declining usage weighing on Yelp's growth outlook
Shares of Yelp Inc (NYSE:YELP) are 2.6% lower before the bell after Bank of America initiated bearish coverage with an "underperform" rating and a $30 price target. The analysts cited declining usage and its ongoing impact on the company's growth outlook.
Coming into today, eight of 10 covering brokerages rated YELP a "hold" or worse. However, the 12-month consensus target price of $41 is a 19.1% premium to Friday's close, which means more price-target cuts could be incoming.
An unwinding of optimism in the options pits could also weigh on Yelp stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day call/put volume ratio of 1.64, which ranks higher than 77% of readings from the past year.
Options look to be an attractive route to go when weighing in on the stock. The equity’s Schaeffer's Volatility Index (SVI) of 27% ranks in the low 6th percentile of the last 12 months. What's more, its Schaeffer's Volatility Scorecard (SVS) is incredibly low right now, sitting at 6 out of 100. This makes the security a prime selling candidate.
Yelp stock is looking to open today's session just above $33.50, an area that has acted as both pressure and support since the security's late-July drop below the $35.50 level. Shares are also set to drop back below their 10-day moving average after reclaiming support from the trendline on Friday, and YELP is on track to add to a 27.3% year-to-date deficit.