Groupon wins price target raise at Roth

Roth Capital Partners has raised its price target on Groupon (Groupon Inc Stock Quote, Chart, News, Analysts, Financials NASDAQ:GRPN) to $27 and is maintaining its Buy rating, citing stronger-than-expected first-quarter results that signal growing traction in the company’s turnaround strategy and improving financial performance across key metrics.

“After a strong start to 2025, it is time to go on offence,” Groupon CEO Dusan Senkypl said in a May 7 press release on the company’s results. “With North America local billings accelerating to double-digit growth and our local marketplace strategy showing green shoots across geographies and verticals, we are building momentum and expect to continue to accelerate our growth. We’re focused on delivering sustainable growth by creating exceptional value for both consumers and merchants.”

Roth analyst Sean McGowan said in his May 8 earnings analysis that billings growth in both North America and international markets (excluding Italy) is positive and accelerating. He added that the sale of Giftcloud has further strengthened the balance sheet, and it’s encouraging to see that revenue and adjusted EBITDA guidance remain intact despite the loss of Giftcloud’s contribution.

“Consolidated billings rose 1.4% vs. last year, the first positive YoY comparison since 2Q’21, compared to our estimate of a 2.6% decline,” McGowan said. “North American Local billings growth accelerated to 11%, lifting total N.A. billings growth to 5%. International billings, excluding Italy, which the company exited in mid-2024, rose 5%.

“The number of merchants with more than \$1M in TTM billings increased 43%, as merchants continue to return to the platform. Management raised its billings growth guidance from 2%-4% to 3%-5%. We have raised our estimate for full-year consolidated billings growth to 6% from 3%.”

McGowan now thinks the company will do $77.3-million in Adjusted EBITDA on revenue of $505.0-million in fiscal 2025. He believes those numbers will improve to $107.5-million on revenue of $569.2-million in fiscal 2026.

Revenue for the quarter came in at $117.2-million, down from $123.1-million a year ago but ahead of the $114.5-million estimate. While the take rate declined due to higher redemption rates, greater enterprise billings and more business in the ‘Things To Do’ segment, McGowan views these shifts as positive long-term trends. Management kept full-year revenue guidance unchanged at flat to up 2%. Still, after accounting for the Giftcloud divestiture, which reduces full-year revenue by roughly $6-million, this effectively represents a small raise. As a result, 2025 revenue estimates were increased from $499.5-million to $505-million.

Adjusted EBITDA was $15.3-million, better than the $13.4-million forecast, though down from $19.5-million last year. Management reiterated full-year guidance of $70 to $ 75-million, which is effectively an increase of about 5% once the roughly $4-million contribution from the now-sold Giftcloud is excluded. Free cash flow was negative $3.7-million, slightly better than the $3.9-million loss reported last year and well ahead of the expected $31.7-million outflow. The €15.5-million sale of Giftcloud closed early in the second quarter and was not included in the first-quarter figures.

“We have raised our 12-month target price to $27 from $24, reflecting not only our increased estimates for 2025-2027, but also our belief that as the company’s turnaround gains momentum, investors will be increasingly comfortable with a valuation that reflects “normal” multiples of revenue and AEBITDA,” McGowan said. “Our target price assumes an EV/Revenue multiple of 2.1x and an EV/EBITDA multiple of just under 11.0x our estimates of revenue and Adjusted EBITDA for calendar 2026.”

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