NEW YORK (TheStreet) -- Shares of Groupon (GRPN - Get Report) are advancing 11.99% to $3.91 on heavy trading volume Monday afternoon after Piper Jaffray raised its rating on the stock to "overweight" from "neutral."
The firm hiked its price target on shares of the e-commerce marketplace to $6 from $4.
"Groupon is deploying $150 million to $200 million in incremental marketing spend in 2016 vs. 2015, largely in the US, which we believe will drive 3.5 million to 4.5 million new active accounts over the course of 2016 and similar levels in 2017," the firm said in a note cited by Barron's.
"[A]s these customers mature to average run-rate levels, they will likely drive $215 million to $280 million in annualized gross profit and return North America local billings growth to double digit levels," Piper Jaffray added.
Wall Street isn't factoring in Groupon's gross profit generation from newly acquired customers, the firm noted.
About 11.47 million shares of Groupon have been traded so far today vs. its average trading volume of roughly 5.54 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.
Groupon's weaknesses include its unimpressive growth in net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
You can view the full analysis from the report here: GRPN
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.