Why Groupon Shares Soared

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of daily-deal specialist Groupon surged 11% today after Deutsche Bank upgraded the stock from hold to buy.

So what: Along with the upgrade, Deutsche Bank analyst Ross Sandler increased its price target on the stock from $6 to $10, representing about 45% worth of upside to Thursday's close. While Groupon continues to face a maturing market for daily deals, Sandler cited management's increasing focus on its mobile strategy as a potent catalyst for growth going forward.


Now what: Sandler expects Groupon's billings to rise 20% and said that its recent initiatives could result in EBITDA being 30% higher than previously thought. "Sentiment has improved since our initial November 'warm-up,' and now we are upgrading amid the current transition phase before growth turns back up," Sandler wrote in a note to investors. Of course, with the stock now up about 50% over the past three months and trading at a forward P/E of 30, much of that turnaround optimism might already be baked into the valuation.

The Motley Fool has compiled a premium research report with in-depth analysis on whether you should buy or sell Groupon right now, and why. Simply click here now to get started.


The article Why Groupon Shares Soared originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners