Groupon initiated with a Buy at Roth MKM

Roth MKM initiated coverage of Groupon with a Buy rating and $30 price target. The company’s sales and cash flow were decimated during COVID and the re-opening, when cash-flush consumers and staff-shortened service merchants reduced reliance on promotions, but now, with consumers weary of high inflation amid growing signs of recession, the demand for Groupon offerings is expected to rise, the analyst tells investors in a research note. The combination of cost cuts, high gross margins and strong cash flow will induce a sharp rebound in valuation, the firm added.