UPDATE: Bank of America Upgrades Groupon as Gross Margins Stabilize

In a report published Thursday, Bank of America analyst Justin Post upgraded Groupon GRPN from Underperform to Neutral, and raised the price target from $5.00 to $11.00.

In the report, Bank of America noted, “While we remain guarded on LT value of the deal bank for merchants (due to potential pricing cannibalization), our cautious view on 2013 gross margins and CSOI estimates is not playing out and we are upping our rating to Neutral from Underperform. In addition, stock optimism could continue in 2H supported by: 1) improving disclosures that indicate stable EMEA gross billings/profitability; 2) improving NA Goods gross margins to 15% in 2Q; and 3) diminishing reliance on e-mail marketing aided by a growing mobile app installed base.”

Groupon closed on Wednesday at $10.71.