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Evercore Partners Gets Slightly More Bullish on Groupon (GRPN)

February 14, 2013 11:59 AM EST Send to a Friend
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Price: $7.41 --0%

Rating Summary:
    9 Buy, 17 Hold, 5 Sell

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Evercore Partners' Ken Sena removed his conviction sell on Groupon, Inc. (NASDAQ: GRPN) and raised is price target from $3 to $5 on encouraging demand signs. However, he is maintaining his Underweight rating.

Local Marketplace deals have grown to 12% of total billings in North America, up from nothing a quarter ago, according to Yipit, the analyst notes. Other checks were also positive, with Groupon's U.S. time spent on mobile devices increasing 36% q/q, an acceleration compared to 3Q's 25% growth, with the bulk of Groupon's time spent (~75%) driven by mobile.

"We are removing Groupon from our conviction sell list and increasing our target price from $3 to $5 on stronger than expected third-party checks this quarter, helped by traction in deal search (its new Local Marketplace offering), and signs of improving mobile engagement. These checks include comScore, Yipit (deal aggregator) and public disclosures on LivingSocial."

Sena is not ready to turn bullish on the stock until he sees stabilization. "In spite of encouraging quarterly checks, we feel it prudent to maintain our Underweight rating on Groupon until we see at least a quarter or two of the suspected stabilization materializing in the actual results. Still, we see it as very promising that Groupon has managed to show traction in local deal search, which, if successful, stands to deliver engagement, revenues, and potential longer-term competitive advantage. Groupon trades at 10x our '13 EBITDA (x-SBE) and 31x earnings estimates, which we view as a fair multiple considering the level of overall business uncertainty that exists."

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 $5.58 yesterday.




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