NEW YORK (TheStreet) -- Groupon (GRPN) stock is down 2.5% to $6 per share in trading on Thursday after the online commerce marketplace operator was downgraded to "neutral" from "buy" by analysts at B. Riley today.
The firm changed its outlook after the company announced that CFO Jason Child will be stepping down at the end of July.
Current VP of Taxes and Treasury Brian Kayman will serve as the interim CFO while the company searches for a replacement.
However, analysts at Brean Capital lauded the transition and reiterated their "buy" rating and $11 price target on the company.
"Rich Williams was promoted to COO from President of North America. Jason Child, Groupon's CFO, will be leaving the company in late July 2015 to join Jawbone (private) as its CFO. Brian Kayman, VP of Tax and Treasury, was named interim CFO (effective immediately) until Groupon finds a permanent replacement," Brean analysts said.
"While sorry to see Mr. Child leave Groupon, because we believe he performed admirably during an important and challenging period of its history (including its November 2011 IPO), we are confident the company will find an able permanent replacement," they said.
TheStreet Ratings team rates GROUPON INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GROUPON INC (GRPN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GROUPON INC has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GROUPON INC continued to lose money by earning -$0.09 versus -$0.14 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus -$0.09).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 62.2% when compared to the same quarter one year prior, rising from -$37.80 million to -$14.27 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The gross profit margin for GROUPON INC is rather high; currently it is at 50.59%. Regardless of GRPN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.90% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GRPN Ratings Report