Groupon's (GRPN) Ideeli Deal is 'Good Fit' - Analyst

January 13, 2014 10:56 AM EST
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Price: $3.47 +0.58%

Rating Summary:
    11 Buy, 20 Hold, 6 Sell

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    Up: 24 | Down: 17 | New: 14
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Wunderlich Securities analyst Blake Harper commented on Groupon (NASDAQ: GRPN) Monday after the company announced plans to acquire flash fashion retailer ideeli for $43 million.

While flash fashion has slowed from the strong growth witnessed in recent years, the deal is a logical extension of Groupon's Goods business and brings relationships with many leading fashion brands, the analyst said. Ideeli had $115 million inrevenue, a $30 million operating loss, and a $27 million adjusted EBITDA loss for the fiscal year ended 2/2/13.

"We believe the deal makes sense to expand Groupon's Goods business, which is now 33% of total gross billings and 42% of total revenues, and the bargain price seems reasonable (0.4x sales in the 12-month period ending almost one year ago) given the available financial metrics," Harper said. "The company has now closed deals on two money-losing properties over the past two weeks with TMON and Ideeli that are logical additions to its core business but will have to work to integrate and leverage them into contributing value to the overall bottom line."

The firm maintained a Buy rating and price target of $13.

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 $11.56 yesterday.

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