Wells Fargo's Trisha Dill sees a "clearer path to profitability" for Groupon's (GRPN +4.5%) Goods e-commerce business following recent initiatives. These include the acquisition of apparel flash sales site Ideeli, and (judging by a job listing) plans to create a private-label product division.
Dill is also upbeat about general e-commerce growth, and particularly the migration of off-price sales to online channels, and considers Groupon's valuation (15x 2014E EBITDA) "compelling."
Goods has fueled a top-line turnaround for Groupon's North American ops in the face of weakening traditional daily deals sales, but has also been pressuring the company's gross margin.
Shares are moving higher on a good day for Web momentum plays. Groupon's Q4 results arrive on Feb. 20.