Groupon Inc. increased the most in five months after an analyst at Macquarie Capital USA Inc. raised his rating on the shares, citing stable fundamentals.
Shares of Groupon climbed 5.4 percent to $5.10 at the close Monday in New York, the biggest increase since Feb. 13.
The fundamentals have been “largely stable” since the company reported first-quarter earnings, said Tom White, the Macquarie analyst, in a research note Monday. Groupon’s cash and asset position following its sale of a controlling stake in South Korean e-commerce site Ticket Monster -- combined with a low-to-mid 20 percent earnings before interest, taxes and amortization growth profile -- also offers a “compelling risk/reward,” he said.
“Investors can buy a growth company at what is effectively a ‘no-growth’ multiple,” White wrote.
Groupon’s stock price has been declining for several months, losing 42 percent from its February high to its closing price of $4.84 on Friday. Chicago-based Groupon, which runs an online marketplace of deals on everything from restaurants to yoga classes, traded around $25 after its IPO in late 2011. At the end of the first quarter, Groupon had no debt and almost $1 billion in cash.
The upgrade by Macquarie reflects Groupon’s move to run an e-commerce marketplace rather than only daily deals -- a way to meet customer demand rather than create it, White said.
“When I’m in the mood to get my teeth whitened, I can go to Groupon and search for it,” White said in an interview Monday. In the past, he would have had to wait for an e-mail.
Groupon’s website has enough deals to attract users but not enough know about it, White said. “I just don’t get a sense yet that most consumers understand that they can use Groupon in this way,” he said.
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