It may have begun its life as a publicly-traded company with all the earmarks of a "whiz kid", but, now it appears analysts are digging in their heels about Groupon Inc. (Nasdaq: GRPN), and demanding the Chicago-based e-commerce company prove itself a bit more strongly.
The stock is in the news this week because more and more analysts are keeping a closer watch on the stock since it broke out of the starting blocks early last month. For instance, Citigroup analysts gave Groupon a "Neutral" rating and set a price of $24 U.S. for its shares -- or $4 U.S. above the stock's initial offering price. One expert said Groupon has been "extremely impressive" so far but must succeed in new segments to make substantial progress, and that could take "significant time to prove out."
Citigroup was, incidentally, one of Groupon's underwriters at its initial public offering (IPO).
Another underwriter, Morgan Stanley, started coverage at "Equal-weight" and a $27 U.S. price tag, pointing to Groupon’s strong growth, and expanding product availability. But the agency also cautioned that Groupon's bread and butter -- local e-commerce -- is a difficult business to forecast.
Goldman Sachs, another primary underwriter, stood out with a "Buy" rating and $29 U.S. target price on the company.
Shares of Groupon, whose IPO was priced at $20 U.S. a share on Nov. 3, has been rising steadily for the past two-and-a-half weeks, from a post-IPO low of $15.24 U.S. to a closing price on Tuesday of $23.32 U.S. But when the reports came out on Wednesday, the stock fell by more than $2 U.S. in the first hour of trading before recovering to finish down 77 cents, or 3.3%, to $22.55 U.S. on Nasdaq.
Friday afternoon, the stock was trading at $22.33 U.S., a drop of 76 cents or 3.3%.
