Analysts from Stifel Nicolaus raised their revenue forecast for Groupon Inc (NASDAQ:GRPN) to $24.4 million and $5.5 million for 2012 and 2013 respectively, due to higher sales on goods. Analysts projected a $0.01 gross profit for 2012, due to lower operating expenses. In 2013, analysts estimated a lower gross profit and higher marketing for the company. The result would be a $0.15 decrease in PF EPS to $0.30
In a research note to investors, analysts cited their recent meeting with Jason Child, CFO of Groupon. According to them, they do not believe Groupon and Daily Deals as a business model will go away, but they think the company holds a dominant share in the market. Analysts expect Groupon to turn around by 2013, after their meeting with Child and discussing a business model rebuild.
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According to Analysts, Groupon Inc (NASDAQ:GRPN) management is looking for new business opportunities, increasing merchant offerings, such as payments, in addition to the scheduler, and recently acquired Savored, a restaurant reservation provider, to move closer to merchants. The company is also improving its selling practices and efficiency. In addition, Groupon Inc (NASDAQ:GRPN) is closing its auditing problems.
On the other hand, analysts also noted the ongoing crisis in Europe continues to remain a challenge for the company. Direct goods may not serve as additives, and the company’s active customers and sales are going downwards, due to lower expenditures in marketing. Analysts also cited the implementation of increased incentives ($5 off by the end of September) does not provide positive impacts for the company under the current trends.
According to the analysts, Groupon is addressing its problems in the European market, including deal relevance, sales force issues, and merchant satisfaction. The company expects its auditors to sign off the 28 internal issues by the end of the current fiscal year. Groupon also hired a team from Amazon.com, Inc. (NASDAQ:AMZN) to handle its search engine optimization and search engine marketing, in order to increase its revenues.
Analysts believe that growth of Groupon Inc (NASDAQ:GRPN) Goods is not-so good for the Daily Deals business, due to its possible dilutive effect on the company’s overall margin trajectory. According to them, “Groupon could partner with flash sales specialists in fashion, consumer technology, and other large niches selling advertising to improve yield. That business, it would seem, could bring high margins revenues, as long as the company prices the advertising inventory appropriately.”
Groupon’s stock value suffered a sharp decline on Tuesday morning to $4.74 per share, after tripping a Nasdaq circuit breaker designed to prevent short selling.