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Analysts Start to Warm to Groupon

Sterne Agee's Bhatia thinks GRPN is headed to $9


Groupon (NASDAQ:GRPN) was a stock that investors loved to hate in 2012. The company had a knack for missing earnings estimates, CEO Andrew Mason seemed to be more a comedian than a leader and, of course, the stock tanked.

But could the daily-deals site be changing its ways?

Well, at least one person thinks so. Sterne Agee analyst Arvind Bhatia just changed his rating from “neutral” to “buy,” putting a $9 price target on the company. (GRPN was trading at $5.30 to begin the day.)

Bhatia says he likes Groupon because it was moving beyond its core daily-deals business, which relies heavily on email marketing. Instead, the company has been focused more on an e-commerce marketplace that uses search engine channels and mobile queries, which tend to be much less spammy and intrusive.

The new approach sounds like a good idea, and Groupon still can leverage its massive infrastructure, which includes thousands of salespeople and more than 40 million active customers. It also helps that daily-deals rivals like LivingSocial have been fading away.

Still, investors shouldn’t be expecting an immediate turnaround. Groupon’s e-commerce marketplace initiative is still in its early stages; right now, it only has operations in Chicago and New York. Instead, Bhatia says his bullishness is for the long-term … not necessarily the next couple quarters.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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