Groupon rises as 3Q adjusted profit tops estimates

Groupon up as 3Q adjusted profit tops Street; announces $260M Ticket Monster deal

Associated Press

NEW YORK (AP) -- Groupon's stock rose Friday as its third-quarter adjusted earnings topped analysts' estimates and it announced a deal to buy Ticket Monster for $260 million in cash and stock.

THE SPARK: Groupon Inc. reported adjusted earnings of 2 cents per share on Thursday. That's above the 1 cent per share analysts polled by FactSet expected.

The online daily deal service also said that it would buy Korea-based Ticket Monster from rival Living Social. The transaction gives Groupon a way to sell more products and travel packages in Korea.

THE ANALYSIS: Arvind Bhatia of Sterne, Agee & Leach said in a client note that the Ticket Monster deal should help to strengthen Groupon's position in its segment that excludes North America, Europe, the Middle East and Africa.

The analyst believes that Groupon is also in a good position to capitalize on the increasing use of mobile devices by consumers.

"Groupon's mobile customers spend more time on Groupon and are more engaged than those on desktop, so the transition to the mobile web is a net positive for Groupon and a critical growth driver going forward," Bhatia wrote.

The analyst maintained a "Buy" rating and $12 price target.

SHARE ACTION: The stock gained 77 cents, or 8.2 percent, to $10.27 in afternoon trading on Friday. Year to date, the shares have more than doubled.

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