Sean McGowan, an analyst from Roth MKM, maintained the Buy rating on Groupon (GRPN – Research Report). The associated price target is $28.00.
Sean McGowan’s Buy rating on Groupon’s stock is based on a number of different factors. Despite Groupon’s 3Q’23 results falling slightly below McGowan’s estimates for revenue and adjusted EBITDA, he views the overall report as bullish due to several key takeaways. For instance, Groupon’s local billings in North America increased by 5% year-over-year, the first rise in over 18 months, signalling a potential shift in momentum. Additionally, while revenues declined, this was partly attributed to the company making their deals more attractive to merchants, suggesting a strategic move to boost future engagement.
McGowan was also encouraged by the reduction in Selling, General & Administrative expenses (SG&A), which came in significantly below his estimate and aligned with Groupon’s year-end goal. The company also reported two consecutive quarters of positive adjusted EBITDA, another positive sign. On top of the 3Q results, Groupon announced efforts to improve its balance sheet and liquidity, including the sale of part of its stake in SumUp and an equity rights offering. These moves, which are expected to raise around $100M, are likely to be used to reduce debt. Finally, despite a delay in the upgrade to Groupon’s consumer website, McGowan anticipates this will enhance user engagement when implemented. Even though he has slightly lowered his adjusted EBITDA estimates and target price, he maintains his Buy recommendation for Groupon’s stock.
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Groupon (GRPN) Company Description:
Groupon, Inc. operates as a global scaled two-sided marketplace that connects consumers to merchants. The firm provides marketing services by selling vouchers through online local marketplaces. It operates through North America and International segment. The company was founded by Andrew D. Mason, Eric Paul Lefkofsky, and Bradley A. Keywell on January 15, 2008 and is headquartered in Chicago, IL.
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