On Monday, Goldman Sachs (NYSE:GS) adjusted its outlook on Groupon, Inc. (NASDAQ:GRPN), increasing the price target to $12.00 from the previous $7.50. Despite the price target hike, the firm has decided to maintain a Sell rating on the company's shares.
The revision follows Groupon's fourth-quarter earnings report, which showed operating results slightly above the company's prior guidance. This progress is seen as a positive step in Groupon's ongoing turnaround efforts.
The report from Goldman Sachs acknowledged that Groupon's management has successfully addressed the going concern issue by taking actions to improve liquidity and by demonstrating improvement in operational trends. Additionally, Groupon has reiterated its revenue and adjusted EBITDA guidance for 2024, which aligns with the recent operational progress and is slightly above some of the pre-release estimates.
Groupon's management has indicated that the company is transitioning towards "building for growth," with a series of turnaround initiatives expected to unfold within 18 to 36 months. Goldman Sachs points out the necessity for Groupon to reposition its platform to meet supply and demand in its marketplace better and enhance internal efficiency. These initiatives are likely to take multiple quarters to materialize.
Investor discussions are anticipated to center on how Groupon's ongoing product initiatives will translate into an improved revenue trajectory over the next 12 to 18 months. Goldman Sachs has updated its forward operating estimates for Groupon based on the recent results and has raised the price target accordingly.
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