Tesla Motors Inc (TSLA), Groupon Inc (GRPN) & Bankrate Inc (RATE): Are Analysts Ahead of the Curve on These Stocks?

Bankrate Inc (NYSE:RATE) surprises but could be on next Groupon

Meanwhile Bankrate Inc (NYSE:RATE) jumped in double digits after beating analyst expectations for the first quarter. The company, which publishes, aggregates, and distributes personal finance content on the Internet, reported a 13% drop in revenue for the first quarter at $108.4 million compared to $125 million in the same period last year. Net income for the quarter also dropped to $2.2 million from $10.2 million in the first quarter of 2012.

These numbers are down from last year but represent improvement on sequential basis. The company also reaffirmed its earlier full-year guidance of flat revenue and adjusted EBITDA margin in the low to mid 20% range. This led analysts to get bullish about the stock and raise their ratings. However, a look at fundamentals reveals the upgrades might be ill-timed.

The stock trades at a price earnings ratio of 46.5 and though it drops to a reasonable level of 20.4 on forward basis, something tells that forward earnings isn’t a particularly good metric in case of these companies. All said and done, the company’s business model revolves around collecting information and delivering it online — a task which does not require a great deal of capital and resources.

In this vein, it resembles Groupon Inc (NASDAQ:GRPN)  which initially stunned investors with strong growth numbers but couldn’t protect its market share as other players ate into its pie due to low barriers to entry.

Foolish bottom line

Overall, these analyst upgrades should be taken with a pinch of salt as these appear nothing more than directional calls on a soaring market.

The article Are Analysts Ahead of the Curve on These Stocks? originally appeared on Fool.com.

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