AP News

OpenTable up as analyst starts with 'Buy' rating

NEW YORK (AP) — Shares of OpenTable surged to their highest level in more than a year Wednesday as Wunderlich Securities recommended that clients buy the stock, saying that reservations made through mobile devices are rising fast and the company has a lot of room to grow.

THE SPARK: Blake Harper of Wunderlich initiated OpenTable with a "Buy" rating and $68 price target.

THE ANALYSIS: Harper points out that said that 49 percent of all restaurants and 16 percent of reservation-making seated diners in the U.S. use OpenTable. And there is even more opportunity overseas, where penetration rates are much lower, Harper said.

The growth of smartphones and other mobile devices is bringing new customers. More than 33 percent of OpenTable's reservations were made with mobile devices last quarter, and Harper says that number will grow.

"We expect the company to continue to attract new and repeat customers with personalized search results, reviews, images, menus and social integration with Facebook and Yelp," Harper wrote.

OpenTable dominates the market in North America and Harper does not see that changing as the company improves data and analytics for restaurants, moves to a cloud-based system, and provides excellent customer service for a large and loyal restaurant base.

THE BIG PICTURE: About 26,000 restaurants use OpenTable's reservation service. Other companies, like Seamless and Grubhub, are rapidly expanding because of the growing tendency to use the web, rather than the phone, to get things delivered to the house.

SHAREACTION: OpenTable Inc.'s stock climbed $3.91, or 7.2 percent, to $57.98. The shares reached $58.08 earlier in the session, the highest point since September 2011.

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