Morgan Stanley On Keurig Green Mountain: We Remain Overweight Despite Low Sentiment

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In a report published Friday, Morgan Stanley analysts maintained their Overweight rating on
Keurig Green Mountain, Inc.
GMCR
. The company has unveiled a new and compelling product, KOLD. However, the slower than expected rollout plan and the initial price point of the product could temper near term expectations and stock performance. The analysts believe, however, that the company's long-term growth and value creation potential remains unchanged. "On the positive side, we believe the quality of product was very solid and will meet expectations of initial adopters of the technology, and we were encouraged to hear management's continued optimism regarding the platform's expansion potential outside the US," the analysts said. According to the report by Morgan Stanley, Keurig Green Mountain's share price performance is likely to be constrained in the near term due to concerns regarding growth in the Hot system in the next few quarters, as well as the impact of the slower than expected phased launch of KOLD on the EPS. "However, the stock still strikes us (although now at lower levels) as a business with a uniquely dominant position in one of the few high growth US food and beverage categories, and we remain confident that as the current level of uncertainty and transition normalizes GMCR will see a valuation more aligned with its mid-term growth potential," the analysts added.
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Posted In: Analyst ColorReiterationAnalyst RatingsMorgan Stanley
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