Stifel: Keurig Green Mountain's Guidance 'Light' But Achievable

Mark Astrachan of Stifel commented on Keurig Green Mountain Inc's GMCR guidance in a note on Thursday following the company's fourth-quarter results reported on Wednesday.

Keurig Green Mountain expects a high-single to low-double-digits improvement in sales for 2015 and a mid-to-high single-digits earnings per share improvement. These projections are "modestly disappointing relative to expectations," according to Astrachan.

Astrachan adds that the company's guidance fell short of expectations due to a lower estimated tax rate that should have boosted EPS by 300 basis points.

The analyst notes that the fourth quarter's K-Cup price/mix declined 6 percent and is expected to remain pressured due to a continued promotional activity which negates a recent price increase. As such, lower selling prices and likely lower margins are likely to continue through fiscal 2015.

Nevertheless, Astrachan states that the company's guidance is "achievable" as he expects fiscal 2015 K-Cup shipment growth to remain in-line with 2014 levels. The conversion of unlicensed to licensed brands and sales of the 2.0 brewer will also help the company while a potential Fall 2015 launch of Keurig Cold remains on track.

Astrachan raised his fiscal 2015 EPS estimates to $4.20 from $4.06 and fiscal 2016 EPS estimates have been raised to $4.69 from $4.54.

Shares are Hold rated.

Shares were recently trading at $140.87, down 8.5 percent.