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Groupon Earnings Preview: What Wall Street's Saying

Sterne Agee analyst Arvind Bhatia (Buy, $12 PT)

"We believe GRPN will report 2Q results in line with expectations. Investors will be looking for signs of improvement on three key metrics-revenue growth in Local, improvement in Goods gross margins and, progress in international operations. We recommend shares of GRPN for longer term investors for the following reasons: 1) GRPN's large addressable market; 2) the potential for turnaround as execution improves and; 3) attractive valuation (2x 2015E revenue vs. peer group at 7x)."

Piper Jaffray analyst Gene Munster (Overweight, $16 PT)

"We remain positive on shares of GRPN. Groupon reports earnings on Tuesday (8/5) and we expect June revenue inline with the Street, likely driven by the goods business with earnings a wild card given that gross margin is heavily influenced by the goods/deals mix. Based on our tracking of listings (local deals), we believe local deal growth started slow in the June quarter and has accelerated into our most recent reading, which was August 4. Our tracking of goods is limited at this time. Given investors have been through the goods-to-deals mix fire-drill in the past, we believe if there is margin disappointment the impact to shares of GRPN would be minimal. As for guidance, we expect the company to reiterate the long term deals marketplace goal, with fluctuations in profitability driven by a the mix of goods and local deals."

Ascendiant Capital analyst Edward Woo (Sell, $5 PT)

"We expect Q2 results about inline with our estimates, for revenue of $760 million and EPS of $0.02, and consensus, for revenue of $762 million and EPS of $0.01. Q2 guidance is for revenue of $725 - 775 million, and EPS of $0.00 - 0.02. We believe that Groupon likely had continued high growth in its Goods business (due to its recent acquisitions), offset by declines in the daily deals industry in Q2 (which we estimate was down 10% from Q1)."

-- Written by Chris Ciaccia in New York

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