Sterne Agee: Here's Why Groupon's Stock Will Almost Double

Sterne Agee analyst Arvind Bhatia slapped a $9 price target on Groupon and gave four reasons for his contrarian call on the stock. (It closed yesterday at $5.29.)

Here, in Bhatia's own words, are the four reasons Groupon could nearly double from here:

1. The company’s evolution beyond its core push email business to pull (search engine, direct site traffic) will ultimately prove successful
2. Management’s renewed focus on the international segment will yield positive results in the coming quarters
3. Competition is easing a bit and we believe underscores how GRPN’s scale is a real advantage in a business with low barriers to entry
4. GRPN’s valuation seems compelling on a relative and absolute basis. GRPN is trading at 0.8x EV to Sales (2014E), which is an 80% discount to its peer group trading at 3.7x. In fact, GRPN has the lowest valuation among its peer group.