Market Overview

Stifel Lays Out Impact of Keurig Cold on Green Mountain, Coca-Cola, SodaStream

Related GMCR
Fast Money Traders Share The Stocks That Can Be Bought At Discount
Mid-Afternoon Market Update: Kirkland's Drops On Downbeat Earnings; Perry Ellis Shares Spike Higher
The Vetr community has downgraded $GMCR to 2-Stars (Vetr)
Related SODA
Watch Out Below, Susquehanna Downgrades Sodastream
US Stock Futures Surge Ahead Of Jobless Claims Data

On Friday, Stifel released some comments on the implications of Keurig Cold on Green Mountain (NASDAQ: GMCR), Coca-Cola (NYSE: KO) and SodaStream (NASDAQ: SODA).

Keurig Cold will allow consumers to brew drinks like Coca Cola Classic from home. Analyst Mark Astrachan expects a “2H15 introduction” of the new system in the U.S. market.

Astrachan believes the new system is worth $28 per share for Green Mountain, “assuming 12% U.S. household penetration by FY20, compared to the 17% estimate of Keurig Hot penetration at the end of FY13.”

The analyst maintained a Hold rating on Keurig Green Mountain shares as the “cold system contribution offsets worsening hot system fundamentals.

Astrachan believes Coca Cola “can generate at least a 15% annual pretax return on its $1.25 billion investment in Green Mountain if Keurig Cold penetrates 3-5% of North American households."

Coca Cola shares were also maintained at Hold, “viewing multiple unattractive versus cash flow power,” said the Stifel analyst.

SodaStream, which Astrachan rates as a Sell, will suffer because of loss of shelf space, which will “create consumer and marketplace confusion, and accelerate already high churn rates.” The analyst also said, “additional promotion and higher marketing expense is the only defense suggesting a structural challenge for SodaStream margins.”

Major beverage players are unlikely to view SodaStream “as a key strategic partner,” because of “per unit economic comparison to Keurig and current soft drink margin structures,” said Astrachan.

Latest Ratings for GMCR

Nov 2015WedbushMaintainsNeutral
Nov 2015OTR GlobalDowngradesMixedNegative
Sep 2015CLSAMaintainsUnderperform

View More Analyst Ratings for GMCR
View the Latest Analyst Ratings

Posted-In: Mark Astrachan StifelAnalyst Color Analyst Ratings


Related Articles (GMCR + KO)

View Comments and Join the Discussion!

Get Benzinga's Newsletters