On Wednesday, Roth/MKM maintained its Buy rating on shares of Groupon, Inc. (NASDAQ: NASDAQ:GRPN), with a steady price target of $26.00. The firm anticipates Groupon to announce its third-quarter 2024 results by November 12, with expectations set for a decline in revenues and AEBITDA, in line with the company's guidance.
Despite the stock's 20% decline year-to-date, the firm suggests that Groupon's recent challenges may have been addressed, positioning the company for potential gains.
The analyst from Roth/MKM highlighted that technical issues, which affected Groupon's performance in the third quarter, appear to have been resolved. Additionally, there is speculation that Groupon may be exploring options to monetize its investment in the payment service company SumUp. These factors could contribute positively to the stock's performance.
The firm's confidence in Groupon is further supported by the expectation of a favorable management commentary in the upcoming earnings call, which is likely to indicate a trajectory for strong growth in the fiscal year 2025. This outlook underpins the firm's decision to restate its Buy rating and price target for Groupon.
Investors and market watchers are now looking towards Groupon's third-quarter earnings report and management's discussion, which may provide further insights into the company's prospects and operational strategies. The firm's maintained Buy rating and price target suggest a positive view of Groupon's stock potential heading into fiscal year 2025.
In other recent news, Groupon, Inc. experienced a series of developments. Among the highlights, Groupon reported a year-over-year increase in North America Local revenues, an uptick in active customers for the second consecutive quarter, and its fifth consecutive quarter of positive adjusted EBITDA, generating $11 million in free cash flow.
Despite facing challenges with a cloud migration project that affected site stability, the company managed to maintain positive financial indicators.
In addition to these financial results, Groupon has revealed plans to expand its Software as a Service (SaaS) organization in North America and to exit the local business in Italy.
This transformation plan, which involves selling non-core assets, is projected to yield approximately $90 million. Despite a 5% year-over-year decrease in global billings to $374 million, Groupon anticipates its revenues to return to sustained positive growth in the fourth quarter, contingent on the successful launch of their new consumer front-end.
These are among the recent developments from Groupon, Inc.
InvestingPro Insights
Recent InvestingPro data provides additional context to Roth/MKM's analysis of Groupon (NASDAQ: GRPN). Despite the firm's optimistic outlook, Groupon's financials present a mixed picture. The company's market capitalization stands at $427.62 million, with a revenue of $511.89 million for the last twelve months as of Q2 2024. Notably, Groupon boasts an impressive gross profit margin of 89.12%, aligning with one of the InvestingPro Tips highlighting the company's "impressive gross profit margins."
However, investors should be aware that Groupon's stock has experienced significant volatility. The InvestingPro data shows a 40.16% price decline over the past three months, corroborating the InvestingPro Tip that the "stock price movements are quite volatile." This volatility underscores the importance of careful consideration when evaluating Groupon's investment potential.
For those seeking a more comprehensive analysis, InvestingPro offers 8 additional tips on Groupon, providing a deeper understanding of the company's financial health and market position. These insights can be particularly valuable given the upcoming earnings report and the potential strategic moves mentioned in the article.
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