Q4 Preview: Groupon (GRPN) to Post First Report Since IPO; Analysts Remain Skeptical on Slowing Growth

Shares of Groupon Inc. (Nasdaq: GRPN) are trading down roughly 0.62 percent Wednesday ahead of the release of its fourth-quarter results after the closing bell. This will be the first report since the daily deal site came public in November.

The Wall Street quarterly consensus for Groupon Inc. is $0.03 per share in earnings on $475.15 million in sales.

For the full year 2011, analysts on the Street are currently estimating a loss of $0.29 per share in earnings on $1.59 billion in total sales.

The fourth quarter conference call is scheduled for 4:30 pm ET.

According to data from Bloomberg, shares of Groupon Inc. have seven ratings, twelve Hold ratings and four Sell ratings. The average price target on shares of GRPN is $24 with a range from $13 to $32.

Analyst Comments:

• Wells Fargo believes the company will report solid fourth quarter results as it forecasts earnings of $0.02 per share on $480 million in total sales for the quarter. The firm notes there may be some upside to its estimates given the strong demand during the holiday season. Wells Fargo does anticipate the average revenue per Groupon fell from $35 to $29 sequentially.
  
  An analyst at Wells Fargo comments, "We believe that Groupon’s leadership position in the daily deals market should provide them with significant scale benefits to help them continue to gain market share. Additionally, we think platform extensions over time should help the company to post above market growth rates for the next several years."
  
  Wells Fargo is reiterating its Outperform rating and $27 to $29 valuation range on the stock going into the release.
  
  
• JPMorgan highlights this should be the first quarter in which Groupon reports positive earnings. The firm forecasts revenues will total $479 million for the quarter and highlights the take rate and Groupons per active customer will continue to show signs of reduction due to the mix shift towards Getaways, Goods, and Groupon Now!.
  
  "The Yipit data," the analyst at JPMorgan notes, "suggests that though the local deals business may be slowing somewhat, Groupon's Getaways, Goods, and Events businesses continue to grow nicely and we are looking for any color on their impact on billings growth at the expense of a lower take rate."
  
  JPMorgan is remaining Neutral on the stock going into earning later tonight.
  
  
• Back on January 4th, Ascendiant Capital initiated coverage on the company with a Sell rating and $14 price target. The firm doesn't anticipate Groupon will report positive earnings for the quarter as growth continues to slow and customer acquisition costs remain a significant concern. Ascendiant Capital also notes the rising competition from the likes of Amazon (Nasdaq: AMZN), Google (Nasdaq: GOOG) and Living Social will hamper revenue and margin growth in the future.
  
  For the quarter, the firm forecasts an earnings loss of $0.01 per share on $482 million in total sales.
  
  
  

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