Groupon Gets an Upgrade by Morgan Stanley Analyst from Equal Weight to Overweight

    June 18, 2012

Groupon shares are on the rise this morning as after Morgan Stanley analyst, Scott Devitt, raised the company’s status from Equal Weight to Overweight.

Despite closing just above $10 per share on Friday, early morning trading reached as high as $11.07, and Groupon is currently trading for $10.75 per share.

Scott Devitt, analyst for Morgan Stanley comments on Groupon’s performance:

“Groupon has emerged as the leading local e-commerce company in an industry with significant barriers to scale,”

“Its advantage due to scale (largest merchant and customer base) and technology (8 acquisitions year to date) has enabled it to accelerate North American revenue growth while improving its margins.”

Devitt also believes Groupon has the capacity to meet the following highly-debated challenges:

* Preserve its competitive position as local e-commerce leader…

* Maintain a ~40% take rate within daily deals segment…

* Continue to grow revenue while expanding margins and…

* Avoid deal fatigue by continuing to improve targeting and personalization.

If you recall, a little over a week ago, Groupon was suffering badly on the stock market as shares fell below $10, and the overall market value of the company slumped below a $6 billion market cap, or less than what Googled offered to buy them for back in 2010.

It is also worth noting that Groupon’s IPO lockup period just ended, and some investors may have been eager to relinquish their shares of the company after a calendar year of poor performance.

This doesn’t mean Groupon is out of the woods yet, but it is a bit of good news in a very conservative investment market. Perhaps Groupon can get its stock back up to IPO prices.