Brean Capital Maintains Buy Following Groupon (GRPN) Management Changes and Repurchase Plan Increase
Brean Capital maintains a Buy rating and $11.00 price target on Groupon, Inc. (NASDAQ: GRPN) following management changes. GRPN announced early Wednesday that Rich Williams was promoted to COO from President of North America. Jason Child, Groupon's CFO, will be leaving the company. GRPN also announced an increase in its repurchase plan.
Analyst Tom Forte commented, "Groupon operates the 10th largest ecommerce platform, according to IDC, and connects 48.1MM active customers with more than 950,000 merchants (since its inception). Before the market opened on Wednesday, Groupon announced management changes, an increase in its repurchase plan, and the company reiterated its 2Q15 and full-year 2015 guidance. Rich Williams was promoted to COO from President of North America. Jason Child, Groupon's CFO, will be leaving the company in late July 2015 to join Jawbone (private) as its CFO. Brian Kayman, VP of Tax and Treasury, was named interim CFO (effective immediately) until Groupon finds a permanent replacement. The company is raising its share repurchase plan to $500MM from $300MM. While sorry to see Mr. Child leave Groupon, because we believe he performed admirably during an important and challenging period of its history (including its November 2011 IPO), we are confident the company will find an able permanent replacement. We are encouraged by the reiteration of guidance and the increase in the repurchase plan is a positive as if should help bolster the stock. We reiterate our Buy rating and 12-month target price of $11, which is based on our discounted cash flow analysis that assumes Groupon is able to achieve long-term adjusted EBITDA margins of 17.0%, compared with 7.9% in 2014."
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Shares of Groupon, Inc. closed at $6.15 yesterday.