NEW YORK (TheStreet) -- Shares of Groupon Inc (GRPN - Get Report) were popping, up 5.27% to $5.09 in early market trading Monday, after analysts at Macquarie raised their rating on the online deal site this morning.
The firm upgraded Groupon shares to "outperform" from a "neutral" rating, while lowering the price target to $7 from $7.75.
The firm pointed to the recent pullback in shares, saying the stock has fallen roughly 29% since the company's first quarter earnings release.
Chicago-based Groupon is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount.
Separately, TheStreet Ratings team rates GROUPON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GROUPON INC (GRPN) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GRPN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.54%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- 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.
- 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.
- GRPN's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.91 is somewhat weak and could be cause for future problems.
- Net operating cash flow has significantly increased by 178.94% to $16.36 million when compared to the same quarter last year. In addition, GROUPON INC has also vastly surpassed the industry average cash flow growth rate of 40.61%.
- You can view the full analysis from the report here: GRPN Ratings Report