Groupon Still A Buy After Ticket Monster Sale, Analyst Says

In a report published Tuesday, B. Riley analysts maintained a Buy rating on Groupon Inc GRPN, after the announcement of the company's plans to sell 46 percent of Groupon's stake in TMON and increase its share repurchase targets.

In the report B. Riley noted the positives as:

• Groupon retains 41 percent of the stake, which gives the company "optionality into further growth in TMON
• Margins are likely to begin expanding
• Management can focus efforts in the US and EMEA region

The analysts list the negatives as:

• TMON is valued at $780MM versus the estimate of $1B
• Groupon has not raised its full year guidance on account of adverse currency effects and the assumption that TMON would have been breakeven for the year

"We believe management is being conservative with guidance considering that volatility in the business can be significant. We have adjusted our revenue estimates for sale of TMON and FX from $3.5B to $3.2B and from $3.9B to $3.5B, respectively," the analysts mentioned.

"With the TMON sale done, Groupon can now move onto the sale of additional properties to unlock shareholder value," the report added.