LinkedIn Corp (LNKD), Yelp Inc (YELP), Groupon Inc (GRPN) – Three Friday Upgrades: What Do These Analysts See?

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A Change Of Heart!

Groupon Inc (NASDAQ:GRPN) did not trade higher last week, but has seen gains of 80% in 2013, and also caught an upgrade from Evercore. Even more so than Yelp and LinkedIn Corp (NYSE:LNKD)’s upgrade, Evercore’s is especially interesting, as the firm has been a long-term bear on the coupon giant.

Groupon Inc (NASDAQ:GRPN) was on Evercore’s Conviction Sell list as early as February of this year. The firm has always questioned the company’s reliance on up-front payments for daily deals to be cash-flow positive. For the most part, Evercore has been right at every step of the company’s post-IPO cycle, predicting billing drops, negative cash flow, and lavish marketing expenses.

Therefore, we must take notice when the firm upgrades Groupon Inc (NASDAQ:GRPN) to Equal Weight with a price target of $8 following the company’s management and business structure changes. The company’s initiatives to expand Groupon Inc (NASDAQ:GRPN) Getaways and its local business offerings have paid dividends.

The company’s growth now looks sustainable, and at 2.5 times sales the stock is not expensive. With that said, Evercore’s $8 target seems reasonable, as this year is crucial for Groupon Inc (NASDAQ:GRPN) in establishing its future, and there could be bumps along the way.

Final Thoughts

Personally, I find the LinkedIn upgrade to be very emotional, coming after earnings and dismissing a very excessive valuation.

Yelp’s call is responsible, with cause, and takes into account valuation due to the target being below its current stock price.

Yet, the call I am most impressed with is by far Evercore’s. Like I said, Evercore has been right every step of the way, and has done something that very few analysts practice, which is calling against the trend and changing their outlook based on changing fundamentals.

This practice is something I discuss in great detail in my book, and Evercore is practicing it to perfection. With that said, I think Evercore’s call is an indication that it’s time to watch Groupon Inc (NASDAQ:GRPN), which I believe would be wise.

Brian Nichols has no position in any stocks mentioned. The Motley Fool recommends LinkedIn. The Motley Fool owns shares of LinkedIn. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article 3 Friday Upgrades: What Do These Analysts See? originally appeared on Fool.com is written by Brian Nichols.

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