Groupon shares hit new low on Europe concern

Wed Jul 11, 2012 2:13pm EDT

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* Citi analyst cuts Groupon price target

* Also lowers Groupon 2013 profit estimate

* Says changes driven by European weakness

By Alistair Barr

SAN FRANCISCO, July 11 (Reuters) - Groupon Inc (GRPN.O) shares hit a record low on concerns about economic weakness in Europe, where the leading online daily deal company gets about one-quarter of its revenue, analysts said on Wednesday.

Groupon was down 5.5 percent to $7.85 during afternoon trading on Wednesday after hitting a record low of $7.72.

"Europe is a concern obviously," said Sameet Sinha, an analyst at B. Riley & Co.

Citi Research analyst Mark Mahaney cut his price target on Groupon shares to $19 from $22 in an Internet earnings preview note that came out late Tuesday.

The cut in the price target was driven by a reduction in Mahaney's estimate for Groupon's 2013 earnings before interest, taxes, depreciation and amortization, or EBITDA. He now expects Groupon to record EBITDA of $718 million in 2013, down from a previous estimate of about $930 million.

The lower estimate was partly driven by concerns about potential economic weakness and currency volatility in Europe.

"European exposure in particular is an issue" for several Internet stocks, including Google Inc (GOOG.O), Amazon.com Inc (AMZN.O), eBay Inc (EBAY.O), LinkedIn Corp (LNKD.N), Priceline.com Inc (PCLN.O) and Groupon, Mahaney wrote in the note to investors.

For Groupon, which is expected to report second-quarter results in late July or early August, "changing foreign exchange trends and still uncertain macro conditions will likely moderate potential upside to Street estimates," Mahaney wrote.

Groupon gets about 45 percent of revenues from international businesses, including about 25 percent from Europe, the analyst noted.

"We will expect Groupon management to provide commentary related to still lingering macro-economic weakness and volatility in both the U.S. and Europe," Mahaney added in the note.

(Reporting By Alistair Barr; editing by Jeffrey Benkoe)

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