Groupon Soars 25% Amid Bullish Analyst Ratings

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Groupon Inc GRPN shares soared nearly 25 percent during Friday’s trading session after beating Q3 estimates Thursday.

The market rewarded Groupon despite it guiding lower for the fourth quarter. Many analysts were also bullish on the stock after the announcement.

Shares traded recently at $7.32, up 22.2 percent.

Below are what analysts thought in response to the Q3 report along with current ratings and price targets.

Credit Suisse - Neutral, $6.50 price target

"FY14 EBITDA guidance was lowered by 7 million due to negative foreign exchange rate movements. Our FY14 CSOI estimate decreases as we flow through the company's guidance and expectation for continued marketing and investment to drive marketplaces awareness. However, given signs of stability in the local business we increase are longer-term gross profit CAGR by 100bps and EBITDA forecasts by 200bps."

Deutsche Bank - Buy, $8 price target

"Local billings re-accelerated across ALL regions, as the company starts to comp through some of the headwinds that weighed on the story over the past year, namely Gmail inbox changes and purchase-to-redeem from mobile. We have patiently waited for this re-acceleration, and we firmly think the worst is now behind Groupon. We think re-accelerating growth and potential asset sales should help GRPN’s multiple."

Barrington Research - Outperform, $8 price target

"Groupon created a new business category and was one of the fastest growing companies ever. It achieved a $2 billion revenue run rate in just three years. However, it reached maturity shortly after, delivering single‐digit organic growth. In response, Groupon changed its business plan and much of its leadership team. It has taken steps to reduce reliance on the email channel, capitalize on mobile, and improve international operations. Groupon is poised to reaccelerate growth and profitability and it enjoys a recognizable brand and market share advantage."

Wells Fargo - Outperform/Volatile, $10-11 valuation range

"Groupon's Q3 results exceeded expectations as the company hit key operating objectives a quarter ahead of plan, which finally got the stock moving. Now the focus returns to the goal of growing gross billings and gross profit dollars by 20 percent+ annually over the next five years. With shares trading under 10x FY15E EBITDA for that level of growth, we continue to like the risk/reward here."

Brean Capital - Buy, $8 price target

"The highlight of the quarter was the double-digit growth in North American local bookings vs. the 1.8 percent YOY increase last quarter and our 5.0 percent projection. Management had guided double-digit growth in 4Q14, so the performance was a pleasant surprise. We would recommend purchase of the shares at current levels, placing a greater emphasis on management’s ability to accelerate North American local billing ahead of lower-than-expected guidance that was due, in part, to unfavorable FX exchange rates. We now turn our attention to the upcoming analyst day on 11/11 in Chicago to serve as the next catalyst for the shares."

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Posted In: Analyst ColorIntraday UpdateAnalyst RatingsBarrington ResearchBrean CapitalCredit SuisseDeutsche BankWells Fargo
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