While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Groupon, Inc. (NASDAQ: GRPN ) climbed 3% this morning after Northland Capital Markets initiated coverage on the daily-deals specialist with a buy rating.
So what: Along with the buy rating, Darren Aftahi planted a price target of $13 on the stock, representing about 22% worth of upside to yesterday's close. The stock has been sluggish in recent months on concerns over waning demand, but Aftahi believes that Groupon's transition from a pure "daily deals" play into a more diversified marketplace should help reignite its breakneck growth.
Now what: Northland thinks management's strategy translates well to both mobile and local offerings. "[Groupon's] recent platform expansion to include brand discounts and coupons (Freebies), enhanced contextual search, emphasis on mobile, and eventual broader expansion into discounted 'productized services' should increasingly make it a destination platform, connecting engaged consumers searching for local deals and merchants looking for a broad channel to promote local commerce offerings," noted Northland. Of course, with the stock still trading at a forward P/E of more than 40, much of that optimism might already be baked into the valuation.
More compelling ways to grow
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.