UPDATE: Brean Capital Initiates Coverage On Groupon

Brean Capital initiated coverage on Groupon Inc GRPN with a Buy rating and $8 price target.

Analyst Tom Forte noted that "catalysts for the stock include an acceleration of growth for North American local gross billings in 2H14 and other indications of progress in its conversion to a pull marketing strategy from its prior push marketing effort."

Forte commented that Groupon's competitive strengths include international expansion, leveraging of technology, mobile and social platforms, opportunities in payments and it is working to be less reliant on third parties for logistical needs.

The report forecasted "North American local billings growth to accelerate in 2H14, with 5.0 percent expansion in 3Q14 (compared to 1.8 percent in 2Q14) and 10.0 percent in 4Q14 due to heightened ad spending to support the change in the business model from its prior daily deal email to a database of 240,000 deals on its website."

The "target price is based on our discounted cash flow analysis, which is predicated upon the company achieving a long-term adjusted EBITDA margin of 16.0 percent vs. 11.1 percent in 2013."

Groupon Inc recently traded at $6.24, up 0.40 percent.