Analysts: Groupon Q3 Could Show Progress In Strategy Shift

Groupon Inc's GRPN third-quarter results set for release Thursday could show progress in a critical business model shift, analysts said recently.

Brean Capital's Thomas Forte thinks if the company can succeed in its shift to a "pull" marketing strategy from its original "push" strategy, the shares could gain value.

Forte launched coverage on Groupon recently with a Buy rating and $8 target.

Groupon's initial "push" strategy involved pushing coupon promotions toward customers via daily emails. In a recent repositioning, the company now relies on allowing customers to more actively select from a list of 240,000 promotions

Forte called the transition "difficult" but said if the plan succeeds, the company will "maintain its competitive advantages of scale and financial strength."

J.P. Morgan's Douglas Anmuth maintains a Neutral rating on the stock, citing "deal fatigue" among consumers.

Anmuth expects Groupon will post results in line with Street views, with revenue growth of about 23 percent and $0.02 per share in adjusted earnings.

Investors should pay attention to the percent of quarterly transactions driven by the company's "pull" strategy versus email, as well as whether local billings and gross profit growth have accelerated, Anmuth said.

Groupon joins a line-up of social media companies reporting this week that have faced a market buzz saw.

Facebook Inc fell 9 percent after the company posted results Tuesday and said it would boost spending. Twitter Inc dropped 15 percent after results revealed a growth slowdown. LinkedIn Corp, also set to report Thursday, is down more than 3 percent this week.

Groupon has also trended down recently and is off 50 percent year to date on worries about its shifting business model and increasing competition.