Brean Capital Remains Bullish on Groupon (GRPN) Ahead of 2Q15 Earnings

Brean Capital maintained a Buy rating and $11 price target on Groupon, Inc. (NASDAQ: GRPN), ahead of 2Q15 results. Analyst Tom Forte said that GRPN's shares have moved, on average, up or down 16.4% on the first day of trading after Groupon announces results, with moves of more than ten percent 71% of the time and more than twenty percent 50% of the time. GRPN is scheduled to release its earnings on August 7th.

Forte commented, "Groupon operates the 10th largest ecommerce platform, according to IDC, and connects 48.1MM active customers with more than 950,000 merchants (since its inception). The company will be reporting 2Q15 earnings on Friday, August 7th at 8:30 AM ET. Since trading at a recent high of $8.30 in late February, shares of Groupon have, for the most part, gone straight down, declining 42.0%, which we attribute to a buyer’s strike. In our earnings preview, we highlight three reasons to buy shares into the quarter: 1) the potential for sustained North-American daily deal growth despite a tough comparison in 2H15, 2) restaurant delivery efforts could diversify Groupon’s product portfolio, and 3) valuation. Consistent with the history of the stock, we expect shares to be volatile next Friday after the company reports earnings. Its shares have moved, on average, up or down 16.4% on the first day of trading after Groupon announces results, with moves of more than ten percent 71% of the time and more than twenty percent 50%. We note that its current short interest is roughly
17% of its float. We reiterate our Buy rating and 12-month price target of $11, which is based on our discounted cash flow analysis, which assumes the company is able to achieve a long-term adjusted EBITDA margin of 17.0% compared with 7.9% in 2014."

For an analyst ratings summary and ratings history on Groupon, Inc. click here. For more ratings news on Groupon, Inc. click here.

Shares of Groupon, Inc. closed at $4.81 yesterday.

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