Market Overview

Brean Capital On Groupon: 'Time To Buy'

Share:
Brean Capital On Groupon: 'Time To Buy'
Related GRPN
15 Biggest Mid-Day Losers For Wednesday
15 Stocks To Watch For May 3, 2017

Investors have long been negative on Groupon Inc (NASDAQ: GRPN), almost immediately after its IPO. Analysts at Brean Capital, however, say now is the time to buy.

In a note on Friday, Brean analyst Tom Forte said the catalyst for Groupon could be the sale of its South Korean unit, Ticket Monster. Through the lens of unfavorable FX exchange rates, Brean analysts see a “wonderful buying opportunity” that represents an upside of more than 47 percent to the $11 price target.

Groupon’s renewed daily deals strength is sustainable –- as seen in the growth in North American local billings at 13.7 percent, up from 10 percent last quarter.

Margins improved 200 basis points at the same time, they noted.

Related Link: Groupon Q4 Earnings: A Chronological Recap

According to the research, Groupon is expected to achieve a long-term adjusted EBITDA margin of 16 percent –- up from 11.1 percent in 2013 –- leading to a valuation that is more in line with its peers.

When it comes to risks, Brean identified three:

1. The Ticket Monster divestiture "may not play out as hoped."

2. Growth in North American deals could be unsustainable.

3. Investments in goods' margins "may take a long time."

Groupon is lower by 1.6 percent in early pre-market trading.

Image credit: Rusty Clark, Flickr

Latest Ratings for GRPN

DateFirmActionFromTo
Apr 2017Morgan StanleyDowngradesUnderweight
Mar 2017BarclaysInitiates Coverage OnUnderweight
Mar 2017CitigroupInitiates Coverage OnNeutral

View More Analyst Ratings for GRPN
View the Latest Analyst Ratings

Posted-In: Brean Capital Tom ForteAnalyst Color Long Ideas Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (GRPN)

View Comments and Join the Discussion!