Groupon, Inc. (NASDAQ:GRPN) Analysts Just Trimmed Their Revenue Forecasts By 15%

One thing we could say about the analysts on Groupon, Inc. (NASDAQ:GRPN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from three analysts covering Groupon is for revenues of US$544m in 2023, implying a not inconsiderable 9.2% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$638m in 2023. The consensus view seems to have become more pessimistic on Groupon, noting the substantial drop in revenue estimates in this update.

View our latest analysis for Groupon

Notably, the analysts have cut their price target 23% to US$9.90, suggesting concerns around Groupon's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Groupon analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2023 compared to the historical decline of 28% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 11% annually. So while a broad number of companies are forecast to grow, unfortunately Groupon is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Groupon this year. They're also anticipating slower revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Groupon's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Groupon going forwards.

Thirsting for more data? We have estimates for Groupon from its three analysts out until 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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