Groupon shares rise on analyst upgrade

Analyst upgrades Groupon on growth in local U.S businesses, stabilization in Europe

Associated Press

NEW YORK (AP) -- Shares of Groupon Inc. rose Thursday after an analyst said the online deals company still has opportunities for growth and upgraded the stock.

THE SPARK: Stifel Nicolaus analyst Jordan E. Rohan published a note commending Groupon's move away from depending on email and focusing on mobile and app-based commerce, as well as its efforts to streamline operations.

THE BIG PICTURE: Groupon built its business on emailing daily discount deals for restaurants, spas and nail salons to users and taking a cut of the money businesses make from them. But Groupon is trying to move beyond that.

To diversify, the company has expanded into product sales, payments services and other areas. In July, it launched Groupon Reserve, a service that lets people book restaurant tables at a discount.

THE ANALYSIS: Rohan said the company's shares should continue to rise for three reasons: Growth is accelerating at Groupon's local businesses in the U.S., a key market for them while the European market is stabilizing; Groupon can capitalize on the shift away from e-mail to app-based e-commerce; and new CEO Eric Lefkofsky is helping to streamline operations. Rohan upgraded the stock's rating to "Buy" from "Hold."

SHARE ACTION: Shares rose 97 cents, or 8.4 percent, to $12.52 in afternoon trading, after earlier reaching a 52-week high of $12.70.

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