KeyBanc Reiterated Buy on Green Mountain Coffee Roasters, Low Probability of Losing Shares

In a report published Friday, KeyBanc Capital Markets Akshay Jagdale reiterated a Buy rating on

and $100 price target following meetings with industry executives. Jagdale wrote, "Following are the main takeaways: 1) GMCR's non-retail business is very diversified, and the Office Coffee Services subsegment is smaller than most estimates suggest; 2) GMCR recently delivered its updated distributor contract (KAD agreement) to its authorized distributors that restricts them from selling non-licensed single serve packs or non-licensed Keurig compatible brewers; 3) several companies launched K-cup compatible brewers at the conference this week in an effort to help willing distributors circumvent Keurig's distributor contract (KAD agreement); 4) based on conversations with a number of large OCS distributors and competing machine manufacturers/sponsors, we assign a low probability to GMCR losing significant share in this channel within the next year; and 5) we do not believe a price war is emerging in this channel – K-cup prices under the latest KAD agreement are largely unchanged." KeyBanc was impressed by Green Mountain's business diversification and noted the five main sub-segments of the business. The segments include Office Coffee Services, Office Superstores, Office Products, Hospitality, and Hospitality and Consumer direct. Despite unhappy distributers from the KAD agreement, the analyst assigned a low probability that Green Mountain will lose shares in this channel over the next year. Green Mountain will report their fourth quarter 2013 earnings results on Wednesday, November 20th after the markets close. Green Mountain closed at $60.63 and is currently trading +2.49%.