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Why Groupon Stock Surged Today

By Evan Niu, CFA - Mar 1, 2021 at 12:36PM

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The online retailer gets some love from Wall Street.

What happened

Shares of Groupon (GRPN -4.34%) have surged today, up by 22% as of 11:15 a.m. EST, after several analysts released positive research notes in the wake of the company's earnings release last week. Meanwhile, the market is enjoying a broad rally as it bounces back from last week's sell-off, with tech stocks in particular seeing strong gains.

So what

Here's what three analysts did today:

  • UBS maintains buy rating, with analyst Eric Sheridan boosting his price target from $47 to $55.
  • J.P. Morgan upgrades from underweight to neutral rating, with analyst Doug Anmuth increasing his price target from $23 to $48.
  • Credit Suisse keeps a neutral rating, with analyst Stephen Ju raising his valuation estimate from $31 to $35.
Groupon logo on TV screens at headquarters

Image source: Groupon.

Now what

The analysts seem encouraged by Groupon's transition to its new third-party (3P) marketplace model. The company's reported gross profits and adjusted EBITDA -- $179 million and $40 million, respectively -- beat Anmuth's expectations, and the analyst is becoming "increasingly constructive" on the strategy as Groupon is doing a good job keeping costs in check. The J.P. Morgan analyst expects Groupon to enjoy a stronger recovery in the back half of the year as it bolsters inventory and offers merchants more tools like sponsored listings.

"Overall, we are encouraged by GRPN's efforts here as it looks to build inventory and modernize the marketplace," Anmuth wrote in a research note to investors. Additional details regarding the other analyst notes were not immediately available. Groupon is preparing to transition its international business to the 3P model in the second quarter, which the company expects to complete by the end of the third quarter.

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