/// After Strong Quarter, Groupon Starts Looking Like a Deal Again

May 15, 2012  |  All Things Digital


Even though Groupon continues to carry the warning that its financial processes are weak, a handful of analysts upgraded Groupon to a buy rating today and investors sent the stock soaring after the company released impressive first-quarter results yesterday. Apparently the final reassurance analysts and investors were looking for was that the company is indeed still growing. Despite taking several measures over the past couple of months in the wake of an awkward fourth-quarter earnings revision, Groupon has not been able to regain investor confidence and has watched its stock price slowly dwindle to half its IPO price of $20 a share. Today, the company’s stock opened at $14.93 a share before settling at $12.17 at the close, up 3.7 percent. At least two analysts were bullish on yesterday’s first-quarter results, upgrading Groupon’s stock to a buy. Sterne Agee upgraded Groupon from neutral to a buy and set a price target of $20. In a note to investors, analysts Arvind Bhatia and Brett Strauser wrote that the strong first quarter “alleviated several concerns,” including Groupon’s ability to have operating leverage. An additional plus, they wrote, is that the stock is trading so far below its IPO price. Likewise, Mark Mahaney from Citi wrote that “we’ll grab this deal,” and upgraded the stock to a buy with a $22 price target. Four factors drove his decision: 33 percent quarter-over-quarter revenue growth in North America, international margins turning positive for the first time, marketing spending declining for the fourth quarter in a row and the very low stock price. As my colleague Ina Fried reported yesterday , Groupon’s first-quarter revenues topped the company’s prior forecast as well as analyst expectations, totaling $559.3 million during the period, compared with $295.5 million a year ago.

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After Strong Quarter, Groupon Starts Looking Like a Deal Again


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