Here’s something you don’t see all that often: A bullish call on Groupon.Sterne Agee analyst Arvind Bhatia slapped a $9 price target on Groupon and gave four reasons for his contrarian call on the stock. (It closed yesterday at $5.29.)
Here, in Bhatia’s own words, are the four reasons Groupon could nearly double from here:
- The company’s evolution beyond its core push email business to pull (search engine, direct site traffic) will ultimately prove successful
- Management’s renewed focus on the international segment will yield positive results in the coming quarters
- Competition is easing a bit and we believe underscores how GRPN’s scale is a real advantage in a business with low barriers to entry
- GRPN’s valuation seems compelling on a relative and absolute basis. GRPN is trading at 0.8x EV to Sales (2014E), which is an 80% discount to its peer group trading at 3.7x. In fact, GRPN has the lowest valuation among its peer group.