Groupon (GRPN) PT Sliced at Evercore Partners Amid 'Mixed' Q1

Evercore Partners analyst Ken Sena cut his price target on Equal Weight-rated Groupon, Inc. (NASDAQ: GRPN) to $6.50 (from $8.00) following mixed Q1 results and margin pressure continues on a softer take.

Sena comments, "For 1Q14, billings of $1.8bn beat us by 12% on higher contribution from TMON, though revenues of $758m were in-line due to TMON’s low teens take-rate. As such, overall take-rate came in at 41.7% vs. our 47.1% expectation. EBITDA missed us by 6%, coming in at $40mm, 5% of revenue. Meanwhile, Groupon guided 2Q14 revenue to $55m in EBITDA at the midpoint, 28% lower than our estimate, despite the influx in marketing emails this quarter."

He added that the core business is showing signs of maturity (x-TMON). "While Groupon’s billings grew ~8% y/y (x-TMON) compared to 4Q’s 5%, much of this acceleration was driven by Goods," he notes. "Specifically, if we look at the core Local business in NA and EMEA, we see just 1% growth y/y in both geographies. Meanwhile, gross profit margin came in at just 51% vs. 55% expected and 63% in the prior year, leading to gross profit falling 7% below forecast at $386mm (+2% y/y).

The firm is lowering 2Q14 EBITDA by 16% to $65m, at the high end of the guide. Moreover, they do see some FY14 EBITDA risk to the company's $300mm EBITDA guide should some of these efforts in Local and Goods efficiency not pan out.

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 $6.72 yesterday.

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