Groupon advances after Wedbush forecasts strong Q3 results
The shares of Groupon (GRPN) are rallying after Wedbush upgraded the stock to Outperform from Neutral, saying that the company's third quarter results should beat expectations. The online local commerce marketplace operator is scheduled to post its Q3 report after the close on October 26. STRONG TRAFFIC: Groupon's Q3 results should feature healthy customer acquisition metrics, driven by its "enhanced marketing efforts," wrote Wedbush analyst Aaron Turner. Third party data shows that visits to Groupon's North America sites jumped 40% last quarter, versus the same period a year earlier, Turner reported. That's up from a 20% year-over-year increase during the previous quarter, he noted. IMPROVED OFFERINGS: After conducting extensive checks on 44 U.S. cities, Turner says that Groupon's "local deal inventory" has surged 30% over the past eight months. By increasing the number of deals it offers, Groupon can raise its sales, Turner believes. He thinks that offering more deals is "critical" for Groupon's growth. VALUATION: There is a "large valuation discrepancy" between Groupon and other Internet companies, Turner stated. Groupon's valuation is low due to uncertainty about the progress of its growth initiatives, but those worries should ease after the company reports its Q3 results, the analyst stated. PRICE TARGET: Turner placed a $6.50 price target on the stock. PRICE ACTION: In morning trading, Groupon rose about 4% to $5.25 per share.