Brean Capital Remains Optimistic On Group But Cuts Price Target To $5

Shares of Groupon rallied on Tuesday heading into its third quarter print after market close. However, the stock was halted shortly after 4:00 PM and remained untradeable until the company completed its post earnings conference call. Groupon did earn more than expected in the

but revenue fell short of expectations. During the conference call, Groupon guided its full year 2016 sales to a range of $2.75 billion to $3.05 billion – short of the $3.19 billion analysts were looking for. Shares resumed trading at 6:20 PM and quickly lost 22 percent. The selling carried forward into Wednesday's pre-market session as the stock was seen lower by more than 28 percent before 8:00AM. In a report published Wednesday, Brean Capital analyst Tom Forte commented that the "much lower-than-expected" 2016 guidance put "severe pressure" on the stock and "overshadowed" a management change and a "decent" third quarter print. Forte continued that the market "disregarded" the positives as Rich Williams (named new CEO) is the "right person" to lead Groupon moving forward. The company should also realize returns from marketing spend and a re-focus on its Groupon Goods category will provide a "higher quality" and "higher margin" opportunity. Forte concluded the he remains "optimistic" in Groupon's prospects and suggested that investors who are willing to wait for management's plan to "unfold," could see upside in the stock over time. Shares remain Buy rated with a price target lowered to $5 from a previous $8.