Seeking Alpha

Groupon rallies; Wells Fargo offers bullish view on recent moves

  • 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.
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