Brean Reiterates Buy On Groupon Following 'Encouraging' Q4 Results

• Groupon Inc GRPN shares have plummeted 69.69 percent over the past year, almost to their 52-week low on Tuesday at $2.22.
• Brean Capital’s Tom Forte has reiterated a Buy rating and price target of $5 on the company.
• Forte mentioned that the company had reported “encouraging” 4Q15 results, along with a “favorable” full year 2016 guidance.

Analyst Tom Forte also said that “management’s acknowledgement that much work still needs to be done, including further refining its international operations to get that business back on track” was encouraging.

Groupon reported total sales of $917.2 million for Q4, meaningfully ahead of the estimate, consensus and guidance. The adjusted EBITDA of $67 million was also significantly higher than the guidance, estimate and consensus.

North American billings growth beat the estimate, driven by “by strong holiday sales between Black Friday and Cyber Monday in 2015,” Forte noted.

“In particular, we were encouraged by two data points, which indicated management’s refinements to the business were positively affecting margins,” Forte stated, while adding that North American shopping margins rose to 10.3 percent, while number of units in each shipment increased by 15 percent.

The full year 2016 sales and adjusted EBITDA guidance was in-line with the forecasts.