Bank of America Reiterates on Green Mountain Coffee Roasters Following 4Q Earnings Preview

In a report published Monday, Bank of America analyst Bryan D. Spillane reiterated a Neutral rating and $75.00 price target on Green Mountain Coffee Roasters GMCR. In the report, Bank of America noted, “GMCR plans to report F4Q13 results after the market closes on 11/20/13. We are forecasting EPS of $0.70 driven by sales growth of +0.6% (+5% y/y single serve packs, -5% y/y brewers, and -15% other products and royalties) and note that 4Q prior year comparisons are negatively impacted by comparing to a 53rd week in FY12. Gross margins are forecasted to be 37.9% (up +450bps vs. F4Q12), largely due to favorable coffee costs. Operating margins are forecasted to be 18.7% (up +210bps vs. F4Q12). GMCR shares have underperformed the market since the investor day on 9/10/13. In our view the stock has been pressured by 1) softening K-Cup trends (sales growth, market share, heightened promotions), 2) lack of significant news flow regarding new partners and 3) skepticism regarding the transition to Keurig 2.0.” Green Mountain Coffee Roasters closed on Friday at $63.02.