Wunderlich analyst Blake Harper initiated coverage on shares of Groupon Inc (NASDAQ:GRPN) with a Hold rating and a price target of $6, which represents a potential upside of 10% from where the stock is currently trading.
Harper observed, “We believe the company has made significant progress to improve its operations and grow its Local billings but has failed to drive sustained upside to revenues and earnings that would cause investors to revalue the stock higher. Local take rates in North America have constrained revenue growth and the fast growing Goods business is unlikely to be rewarded a higher valuation in our opinion given its lower margins, further required investments and a more competitive environment.”
Furthermore, “We view the sale of its money-losing TMON business and the reduction of losses in the Rest of World segment more favorably. The company has a decent sized buy back (12.5% of the shares outstanding) in place and given its discounted stock at 0.9x EV/Sales, we believe represents good value but must overcome inconsistent execution and tepid growth.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Blake Harper has a total average return of -7.8% and a 38.5% success rate. Harper has a -21.7% average return when recommending GRPN, and is ranked #3553 out of 3640 analysts.
Out of 21 analysts polled by Tipranks, 9 rate Groupon stock a Buy, and 12 rate the stock a Hold. With an upside potential of 63.79%, the stock’s consensus target price stands at $8.91.