Groupon shares rise on optimism about strategy shift

Fri Jun 14, 2013 1:01pm EDT

People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011. REUTERS/Frank Polich

People enter and leave Groupon Inc corporate office and headquarters in Chicago, Illinois, November 4, 2011.

Credit: Reuters/Frank Polich

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(Reuters) - Groupon Inc (GRPN.O) shares rose more than 10 percent to the highest level in almost a year on Friday after an analyst upgrade stoked optimism about a recent strategy shift by the world's largest daily deal company.

Deutsche Bank analysts Ross Sandler and Lloyd Walmsley raised their rating on Groupon to buy from hold and increased their share price target to $10 from $6.

Groupon's original approach was to send daily emails to subscribers offering big discounts on local services like restaurant meals, yoga and manicures. But last year, the company changed tack, building a large online database of longer-running deals that can be searched on its website.

This new approach may help drive more growth because Groupon can show a lot more deals to customers now. The company can also promote this larger store of offers through online marketing, such as Google Inc (GOOG.O) search advertising, the Deutsche Bank analysts explained.

This "pull" technology - versus the old email "push" approach - is a "game changer," Sandler and Walmsley wrote in a note to investors on Friday.

Groupon shares were up 13 percent to $7.76 in afternoon action on Friday. The stock hit an intra-day high of $8.03, the highest level since July 2012.

(Reporting by Alistair Barr; Editing by Phil Berlowitz)

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