Why Zulily Inc. Shares Could Zoom to $50

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 analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Zulily  (NASDAQ: ZU  ) gained 4.5% in premarket trading Wednesday after Goldman Sachs upgraded the online retailer from neutral to buy.

So what: Along with the upgrade, analyst Taposh Bari raised his price target to $50 (from $47), representing about 37% worth of upside to yesterday's close. So while momentum traders might be turned off by Zulily's sharp decline since late February, Bari's call could reflect a sense on Wall Street that its growth prospects are just too cheap to pass up.

Now what: According to Goldman, Zulily's risk/reward trade-off is rather attractive at this point. "With the stock off 46% from its February 28 peak on the back of sector multiple compression and its lock- up expiration, we see a good entry point as the company expands its merchandising, fulfillment, and marketing initiatives which we expect to drive higher-than-expected customer growth into 2015," said Bari. Given Goldman's solid call-making track record -- currently ranked in the top 15% of our CAPS community -- growth-oriented Fools might want to take a closer look at Zulily.

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  • Report this Comment On June 25, 2014, at 10:33 AM, RobertoMurphy wrote:

    On another note, competitor of ZU, Groupon's (GRPN) price target was raised to $16 by Piper Jaffrays Jene Munster.

    Jene Muster was one of the most prolific analysts that has covered Apple. Thus, for him to give a mind blowing $16 price target on Groupon does not go unnoticed. The $16 price target, offers about 246% upside to yesterdays close.

    With annual revenues growing at 20% plus and an increase in the user base, Groupon is a screaming buy at current levels. Currently Groupon it trading at a 40% discount to the amount Google tried acquiring them for.

    Groupon's risk/reward trade-off is rather attractive at this point. With the stock off a whopping 50% from its recent high, this is a must own equity for the 21st century.

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