Analyst Likes Groupon's Stock, With Or Without An Acquisition

Groupon Inc GRPN has long batted its eyes at potential suitors, but in the last month, it’s grown more aggressive in its soliciting, according to a Saturday report by Recode.

"Groupon executives — as well as bankers who represent the company — have contacted several public companies in the past month to try to drum up interest," Recode's Jason Del Rey reported. "Groupon has made it known for some time to potential acquirers that the company is open to the idea of a sale."

Sale prospects aside, DA Davidson is buying.

The Rating

Analyst Tom Forte maintained a Buy rating on Groupon with an $8 price target.

The Thesis

Forte wasn't surprised by the news of Groupon’s sale strategy and appreciates the opportunity to drive incremental share value.

“We would argue its North American business has never been in better shape and its international operations are well positioned, yet shares are trading well below $5,” Forte wrote in a note. “Therefore, if the public markets are not giving the company the value we believe it deserves, maybe the right strategic buyer would.”

Whether Groupon sells or not, the analyst values the stock at a base $8. At minimum, he assigns a $6 price and, in the chance of a buyout or growth-rate improvement, $12.

“We see tremendous value in shares of GRPN, either as a standalone entity or an acquisition target for another company,” Forte wrote.

He listed Booking Holdings Inc BKNG’s Priceline, Alibaba Group Holding Ltd BABA, Alphabet Inc GOOGLGOOG, Facebook, Inc. FB, IAC/InterActiveCorp IAC and Qurate Retail Inc QRTEA as potential purchasers.