Groupon (NASDAQ:GRPN)'s shares experienced a significant increase after Roth MKM analysts initiated a Buy rating and set a target price of $30, triple Thursday's closing price. This comes after the company faced substantial sales declines over three years due to the impact of the pandemic on retail and travel sectors. InvestingPro data reveals that the company's revenue for the second quarter of 2023 was $543.27M, reflecting a decrease of 26.97% compared to the same period in the previous year.
As physical stores reopened, merchants saw less need for discounts because consumers had ample stimulus cash. This led to further sales decreases for Groupon. However, the analysts are forecasting a strong revenue upswing due to depleted consumer savings and inflation effects. They highlighted Groupon's potential to generate cash during growth periods and pointed out its dormant $245 million stock repurchase plan. They predict that buybacks would resume by mid-2024. This aligns with one of the InvestingPro Tips that mentions Groupon's high shareholder yield, which could be a positive sign for investors.
In addition to Groupon's core business, the analysts also noted value in non-core assets like GiftCloud and SumUp. Despite this positive outlook, Groupon's shares dipped after it agreed to sell a portion of its stake in SumUp at a lower valuation than expected.
Roth MKM's forecast suggests a potential recovery for Groupon after years of declining sales. The company's ability to leverage its assets, combined with the predicted economic conditions, could drive revenue growth and increase shareholder value in the coming months. However, it's worth noting another InvestingPro Tip that highlights Groupon's declining trend in earnings per share, which could be a potential concern for investors. For more insightful tips like these, you can check out InvestingPro which provides a total of 17 additional tips for Groupon.
Groupon's market cap stands at $402.79M, and its price to earnings (P/E) ratio is -2.58, according to InvestingPro data. The company's gross profit for the second quarter of 2023 was $472.53M, with a gross profit margin of 86.98%. Despite the challenges, the company's stock has seen a large price uptick over the last six months with a total return of 182.69%. This shows that Groupon's stock performance has been strong in the recent past, which could be an encouraging sign for potential investors.
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