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YELP To Benefit from Apple Maps Improvements, Says Wedge

shares of online recommendations purveyor Yelp (YELP) are up 98 cents, or 3.6%, at $28.44, following a note from Wedge Partners‘s Brian Blair, who writes that the company could benefit from Apple‘s (AAPL) refresh of its own maps application, which he expects will be discussed during next Monday‘s keynote presentation at Apple’s Worldwide Developer Conference in San Francisco.

It’s been one year since Apple announced integration of Yelp’s local listings data and reviews into its iOS operating system for the iPhoneiPad, and iPod Touch, notes Blair, and “Yelp’s stock is up roughly 75% since that period, driven by growth in the mobile side, which has been lead (in our opinion) by iOS integration.”

Blair notes that “36% of ad impressions were shown on mobile in Q1 (vs. 25% in Q4:12). This is much higher than our expectation of 27% and reflects the company’s increased leveraging of both the mobile Yelp app, as well as Yelp on the mobile browser, each of which supports ads.”

Improvements to Maps, widely derided for errors when it was released in September, could help Yelp, he thinks:

Even with Yelp’s solid growth in mobile, however, we believe that the issues surrounding Apple Maps have somewhat crimped Yelp’s usage by iOS users who initially had problems with Apple Maps, largely with its ‘accuracy’ […] We expect to see numerous changes and feature updates announced for Apple Maps that significantly improve the user experience and ultimately increase adoption of the platform by existing iOS users. We believe this will be a positive for Yelp’s mobile metrics, particularly for CYQ4 and provide a stock catalyst, as we believe a better Apple Maps experience will increase Yelp usage by existing iOS users, many of whom continue to use alternative mapping platforms since last September. 

Fixes could include public transit directions, improved accuracy of labels and positions, improved directions, better context to local searches, and “an announcement of ‘human analysis’,” writes Blair, as he thinks Apple needs to add something akin to Google‘s (GOOG) roving fleet of cars that create Street View to improve accuracy.

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Mystic Maggie

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