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Yelp ( YELP ) and Groupon ( GRPN ) got hit with bearish analyst reports Wednesday, but Angie’s List ( ANGI ) got a more positive note. Yelp stock dropped Wednesday after the consumer review website was downgraded to sell from neutral by investment bank UBS. Yelp stock was down 2.5% in afternoon trading in the stock market today , near 20, and has tumbled more than 55% in the past 12 months. UBS cited concerns over the potential of product innovation taking a hit as user growth declines. “Yelp will enter a period of slowing revenue growth and heightened margin pressures, driven by increased competition in Yelp’s core business and share gains by larger digital ad companies,” wrote UBS analyst Eric Sheridan. Decelerating traffic growth and rising hiring costs in sales and marketing also are concerns, said Sheridan. “An additional worry is the lack of operating profit to re-invest to drive innovation that might counter-act the platform strength of Alphabet ( GOOGL ) subsidiary Google and Facebook ( FB ),” Sheridan said. He added that “the companies which will succeed in the fight for local advertising budgets are those that have established large mobile user bases. In our view, Yelp (despite its efforts) has lagged in user growth, product innovation and necessary tech investments.” Groupon Pressure Mounting Business pressure is also unlikely to ease anytime soon for online daily deals marketplace Groupon, Sheridan said in another report Wednesday. Groupon stock has plunged nearly 50% in the past 12 months and was down 10.3% Wednesday afternoon, near 4. While showing signs of progress in its transformation to an e-commerce marketplace, Sheridan said, “there is still a long road ahead in strengthening the company’s positioning in the local ad and/or local ecommerce market.” Groupon is being buffeted as Google, Facebook and others “are increasing their efforts to capture local ad dollars, while Amazon.com ( AMZN )‘s same-day delivery service reduces the benefit of a local marketplace,” Sheridan said. Angie’s List Revenue Estimates Hiked Good news came to Angie’s List ( ANGI ) in the form of a revenue outlook boost from Pacific Crest Securities, which praised the online review site’s recent decision to drop its current membership model and replace it with free access to its business ratings and reviews as part of a tiered subscription plan. The addition of the free tier “should reignite user growth,” wrote Pacific Crest analyst Evan Wilson in a research report Tuesday. Pacific Crest upped its 2016 estimate for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for Angie’s List to $34 million, up 58%. “While it’s difficult to model, we think the news of a free Angie’s List will drive an inflection of user traffic and subsequently be much more attractive to service providers,” Wilson wrote. “We think the benefits will accrue fully in 2017, and 2016 has become a tough-to-forecast transition year.” Angie’s List stock was down a fraction in afternoon trading Wednesday, near 8. Scalper1 News
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