Although Groupon shares have taken a beating since their market debut last year, one analyst thinks the stock is nearing a range in which it is fully valued.
"I think it's certainly more appealing here than it was at $20 or $26," said Max Wolff, chief economist and senior analyst at Greencrest Capital Management. "I think we're getting toward a point of fair value here for Groupon (GRPN)."
Still, Wolff told CNBC's "Worldwide Exchange" that a gigantic question mark remains - whether the company is on track to "meaningful and sustained profitability."
"I wouldn't be going gangbusters for Groupon here," Wolff said. "However, there is some reason to believe that they'll be able to continue to cut back on their customer acquisition cost and continue to grow revenue."
Wolff's comments come one day after Morgan Stanley upgraded it to "overweight," which prompted a strong rally in the daily-deal site's shares.
Last month, the company launched the Groupon Rewards program in its latest attempt to turn one-time deal users into loyal repeat customers for merchants. Until now, the company has not been particularly good at this transition and has alienated many merchants because of it, Wolff said.
Although many in the tech space have suffered in the transition from the web to mobile devices, Groupon has been able to stay "front and center in the move to mobile" and monetize the technology well, Wolff said. The company is currently trying to become even more targeted and modern at aiming deals at consumers.
"They're not there yet, but they have made meaningful strides in that direction," he said. "People will continue to watch that."
This is especially important because there are low barriers to entry in the daily deals space, Wolff added.
"If they don't master a technology, there's no particular reason to believe that Groupon can remain dominant in the space especially with Google and Amazon as competitors," he said.
Additional News: Groupon Pops on Upgrade
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Max Wolff has family members that own shares in Google and Amazon.
Follow Katie Little on Twitter @katie_little.
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