Here are three additional reasons I am bullish on Groupon.
1. Deutsche Bank Upgrade
An analyst at Deutsche Bank AG (NYSE:DB) just upgraded shares of the company from “hold” to “buy” and increased the price target to $10. In addition, the analyst expects Groupon Inc (NASDAQ:GRPN)’s billings to grow by 20% this quarter.
2. Improved Marketing Strategies
Two types of direct marketing include pull marketing and push marketing. Groupon was focused primarily on push marketing. This is when the company sends out emails with the goal of reaching consumers who might be interested in its partners’ products or services.
Pull marketing, on the other hand, is the goal of attracting customers to the Groupon site to search for a variety of local deals. In its most recent quarter, 45% of the company’s North American business came from smartphone and tablet users, and its mobile apps were downloaded more than 7 million times. While sophisticated spam filters may block push email marketing attempts for many users, pull marketing through the website and mobile apps avoids this issue.
In addition, consumers are more likely to purchase several Groupon Inc (NASDAQ:GRPN) deals when browsing the website or app rather than just the one featured in the email blast.
3. Share Momentum
Groupon’s stock has been in an uptrend since November: The price is up more than 100% from its sub-$3 November lows. It has broken above both the 50- and 200-day simple moving average resistancelevels. The uptrend, now 8 months old, shows no technical signs of ending.
Risks to Consider: Groupon Inc (NASDAQ:GRPN) faces several factors acting as headwinds. The first is consumer “deal fatigue,” which means customers aren’t loyal to Groupon and will switch to another deal provider at the drop of a hat. Secondly, deep-pocketed competition springing up from companies like Google Inc (NASDAQ:GOOG) is certain to take customers away from Groupon. Last, many businesses have discovered that more than a few Groupon Inc (NASDAQ:GRPN) clients are purely deal-driven and will not return to purchase items at regular prices, resulting in non-repeat business for Groupon.
Action to Take –> I like Groupon Inc (NASDAQ:GRPN) on a breakout close above $8. If the uptrend continues, then shares could rise to $15 within the next 12 months.
This article was originally written by David Goodboy and posted on StreetAuthority.