Groupon Inc. (NASDAQ: GRPN), while falling on the year, appears to have a good outlook going forward. Sterne Agee’s Arvin Bhatia and Brett Strauser speculate that the company is trading with a deep discount, compared to its peers, and that if it can focus on a few goals, it will be able to almost double its current valuation.

The goals that Groupon needs to focus on are growing its North America Local billings and increasing gross margins in the Goods segment by year-end.

The first ever upcoming investor day in November is likely to have a strong impact on Groupon. The story behind this company is said to have “a lot of moving parts” and is not well understood on Wall Street; this investor day could seemingly clear the air and attract more investors to this company.

Groupon has an overarching investment theme that revolves around two e-commerce trends: Mobile and Local (think Yelp).

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Bhatia and Strauser outline how Groupon can build on Yelp’s model to benefit its business:

Potential New Initiative — Build a Yelp-like service. Over the near to intermediate term, we see potential for GRPN to broaden its scope and build a Yelp-like service that includes: 1) building a community of contributors that provides reviews, tips, ratings, and photos, etc. of local businesses; 2) drives greater consumer traffic to Groupon’s website and its mobile app; and 3) ultimately drives local as well as brand advertising. Groupon’s existing relationships with local merchants, its personnel on the ground that interact with local merchants on a regular basis, and its highly successful mobile app (92 million downloads) are only some of the inherent advantages that could make GRPN successful in this type of initiative.

From this initiative, Groupon will also be able to generate advertising revenue that would be an entirely new and incremental revenue stream. Yelp indicated that the U.S. local advertising market is in the area of $145 billion. This includes $35 billion from the online market.

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Sterne Agee issued a Buy rating for Groupon with a price target of $12.

The shares traded at $6.88 in the noon hour Friday. The stock has a consensus price target of $7.28 and a 52-week trading range of $5.18 to $12.72.

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