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Roth/MKM reiterates Buy on Groupon stock, buoyed by strong Q1 outlook despite tax issues

EditorEmilio Ghigini
Published 04/16/2024, 06:49 AM

On Tuesday, Roth/MKM sustained its optimistic stance on Groupon, Inc. (NASDAQ:GRPN) stock, maintaining a Buy rating and asserting a $28 price target. This affirmation follows Groupon's recent regulatory filing, which indicated that the company's first-quarter revenues and adjusted EBITDA for 2024 were on track to meet or exceed the upper end of its previously issued guidance.

The regulatory filing in question was an 8K submitted on Monday, detailing Groupon's financial performance. Although the document was primarily related to an unfavorable tax ruling against Groupon's Italian subsidiary, the update on the company's financial outlook was a significant highlight.

Roth/MKM emphasized the positive over the negative, suggesting that the financial results held more weight than the tax dispute outcome. The firm expressed confidence in Groupon's financial trajectory, leading to the reiteration of the Buy rating and the $28 price target.

The tax dispute involves Groupon's Italian subsidiary, which has faced an adverse ruling. However, the specifics of the ruling and its potential financial impact on Groupon were not disclosed in the context provided.

Groupon's performance, as indicated by the 8K, seems to have reassured Roth/MKM about the company's ability to drive growth and manage its operations effectively, despite the setback in Italy.

InvestingPro Insights

Following the positive outlook from Roth/MKM, InvestingPro data provides a deeper dive into Groupon's current financial health. With a market capitalization of $389.7 million and a notable gross profit margin of 87.52% for the last twelve months as of Q4 2023, Groupon shows strength in its core operations. However, the company's revenue has seen a decline of 14.05% over the same period, indicating challenges in top-line growth.

InvestingPro Tips highlight that Groupon is expected to see net income growth this year, which aligns with analysts' predictions of profitability. This could be a pivotal factor for investors considering Roth/MKM's optimistic $28 price target. Additionally, the stock's high shareholder yield and impressive gross profit margins suggest that Groupon has been effective in generating value for its investors. On the other hand, the company's high price volatility and the fact that short-term obligations exceed liquid assets may raise concerns about its financial stability in the near term.

For investors seeking more comprehensive analysis, there are over 10 additional InvestingPro Tips available, which can provide further insights into Groupon's financial metrics and stock performance. To access these insights and refine your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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