Wedbush Expects Upside Surprise from Groupon (GRPN) in Q3, Raises Rating to 'Outperform'
- Wall Street dips as Verizon drags; AmEx curbs losses
- Unusual 11 Mid-Day Movers 10/20: (DRWI) (MBRX) (SPU) Higher; (RIGL) (FLXS) (DXPE) Lower
- Tesla (TSLA) Announces Self-Driving Hardware for All Vehicles in Production; Includes Model 3
- Walgreens Boots Alliance (WBA) Tops Q4 EPS by 8c; Guides FY17 EPS
- Verizon Communications (VZ) Tops Q3 EPS by 2c
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
(Updated - October 17, 2016 8:04 AM EDT)
Wedbush upgraded Groupon, Inc. (NASDAQ: GRPN) from Neutral to Outperform with a price target of $6.50 (from $4.50). Analyst Aaron Turner said he expects strong Q3 results.
"We expect GRPN to report Q3 results above expectations due to accelerating site traffic growth and improving deal inventory. We see a large valuation discrepancy between GRPN and other internet peers, which we believe will close once investors recalibrate their growth expectations for GRPN following the Q3 report," said Turner.
"Third-party site traffic data indicates growth to GRPN’s North America sites accelerated to 40% YoY in Q3 from 20% in Q2. (fig. 1&2) We believe this is another indication company’s increased marketing efforts have been successful. Assuming a conversion pattern similar to historical levels, we believe this traffic will drive upside to revenue expectations for the quarter," continued the analyst. "Our sample of local deal inventory across 44 US cities that we’ve conducted on a regular basis since we initiated in February shows GRPN has steadily grown local deal inventory by 30% over the past eight months. We believe growing GRPN’s deal inventory is a critical condition for growth as it increases the probability of conversion."
Turner added, "We see a large valuation discrepancy between GRPN and its internet peers. We expect GRPN to achieve robust adjusted EBITDA growth over the next few years as it laps its restructuring efforts, expands gross margins due to mix shift, and enjoys benefits of scale. We believe GRPN’s current valuation is due to uncertainty over progress on its growth initiatives and we expect this concern to dissipate following its Q3 report."
Shares of Groupon, Inc. closed at $5.01 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UPDATE: Wells Fargo Upgrades Vail Resorts (MTN) to Outperform
- Jefferies Cuts Price Target on Genuine Parts (GPC) to $95 Following 3Q Report
- Wedbush Cuts Price Target on Bj's Restaurants, Inc. (BJRI) to $34; Reiterates Neutral
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!