RBC Capital Downgrades Groupon, Inc. (GRPN) to Underperform

February 21, 2014 6:22 AM EST Send to a Friend
Get Alerts GRPN Hot Sheet
Price: $7.51 --0%

Rating Summary:
    9 Buy, 18 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
Trade GRPN Now!
Join SI Premium – FREE
RBC Capital analyst Mark Mahaney downgraded Groupon, Inc. (NASDAQ: GRPN) from Sector Perform to Underperform with a price target of $7.00 (from $11.00) following mixed Q4 results, with a minimal EBITDA growth outlook for '14 that was significantly below expectations.

The downgrades reflects: "1) Our dramatically reduced estimates and our valuation framework point to valuation downside; 2) North America and International Billings trends are showing greater weakness than expected; 3) Active Customer and Billings Per Customer trends are softening; 4) NA Local Billings (what we view as the company’s key segment) showed only 2% Y/Y growth in Q4; and 5) We view GRPN’s goal of becoming the “starting point for (all) Mobile Commerce” to be excessively ambitious and undermining of the company’s potential to win the Local Commerce/Services market."

Mahaney cited the following positives and negatives:
Positives: 1) Robust Revenue Growth – 20% Y/Y Q4 Revenue growth was the highest we have seen all year, positively impacted by higher than expected EMEA take rate; 2) Continued Mobile Traction; & 3) GRPN Repo’d 3.7MM Shares In Q4. Negatives: 1) Profitability Outlook A Lot Lower Than We Had Thought – Q1 EBITDA guide and implied margin below the Street (at the mid-point) and FY14 Outlook much lower than we anticipated; 2) Billings Growth Rates Decelerated – Total Billings grew 5% Y/Y in Q4, down from 10% in growth in the September quarter; 3) Active Customer Trends Deteriorated – North America Net Customer Adds of 900K were down from 1.2MM in Q4:12; & 4) North America Local Gross Billings Growth Evaporating – growth of 2% Y/Y decelerated sequentially from 15% growth in Q3.

'14E EBITDA decreases 40% to $288MM.

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 $10.28 yesterday.


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change, Downgrades, Hot Downgrades

Related Entities

RBC Capital

Add Your Comment