The Ratings Game
Groupon rallies after ratings upgrade6/6/12 4:43 PM ET (MarketWatch)
SAN FRANCISCO (MarketWatch) --
Stifel Nicolaus analyst Jordan Rohan raised his rating on Groupon (GRPN) to hold from sell and set a "fair value" price range of $8 to $12 a share on the company's stock.
Groupon's shares took the high ground early and closed with a gain of 85 cents, or 8.6%, to $10.63.
In a research note, Rohan said that Groupon's stock has appeared to enter "a new equilibrium range" and should see some stability after a raft of negative events.
Those include Groupon restating its quarterly results in April; an almost 50% drop in the share price since the company went public in November; and two days of selling fueled by the expiration last Friday of the post-IPO lockup period for Groupon's insiders to sell their shares. The end of the lockup restrictions led to Groupon's shares falling to as low as $8.80, and for a while, cutting the market valuation to below the $6 billion level -- which is what
However, Rohan noted that investors already have discounted Groupon's risks, and that he expects the company to develop more growth areas such as direct e-commerce offerings and also to expand its margins.
The analyst's outlook on Groupon came one day after Benchmark Capital analyst Clayton Moran also issued a positive view on the company.
Moran wrote in a note that Groupon's market opportunity "remains enormous" as it continues to branch out more into location-based offerings. He also maintained his buy rating and $20 target price on the stock.