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Keurig Green Mountain Gets Roasted

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Keurig Green Mountain Gets Roasted
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The pod has been dominating the coffee industry with introduction of the Keurig coffee machine, though the parent company is getting completely roasted. Keurig Green Mountain Inc (NASDAQ: GMCR) sunk nearly 30 percent in Thursday’s pre-market session.

The steep drop came in just after the speciality coffee-maker company reported disappointing quarterly results; EPS of $0.80 per share on sales of $969.6 million. Analysts were expecting earnings of $0.79 per share on revenues of $1.03 billion. Keurig reported reduced sales on both its coffee pods alongside its brewing systems.

Keurig also announced that it will cut 5 percent of its 6,600 employees (330 jobs) in order to reduce costs by ~$300 million in the next three years. The coffee specialist also reduced its earnings per share forecast for the fiscal year, specifying that it plans to spend ~$100 million on its cold-drink system. It mentioned the rising coffee prices, which will take a toll on sales of its coffee pods in the near future.

Related Link: Goldman Downgrades Keurig, Calls Move 'Three Quarters Too Late'

The company’s Kold system will allow consumers to make sports drinks, sodas, and other beverages with an easy click of a button, but it will be slightly more expensive than the usual Keurig system, at a price of $369.

Wall Street analysts had something to say about the coffee-maker:

  • Morgan Stanley: Analyst Matthew Grainger downgraded the stock from Overweight to Equal-weight and slashed his price target from $110 down to $60. He pointed out the risk of erosion and feared the company’s ability for sustainable growth in earnings.
  • Wedbush Securities: Reiterated at Neutral; reduced price target from $85 down to $67.
  • Canaccord Genuity: Downgraded from Buy to Hold. Price target lowered from $120 to $65.
  • Susquehanna Bank: Downgraded from Positive to Neutral.

SUMMARY: 3 Downgrades, 1 Reiterate; 2 Neutral, 1 Equal-weight, 1 Hold rating. Price target range from $60-$67.

The stock is down nearly 44 percent year-to-date.

Latest Ratings for GMCR

DateFirmActionFromTo
Nov 2015WedbushMaintainsNeutral
Nov 2015OTR GlobalDowngradesMixedNegative
Sep 2015CLSAMaintainsUnderperform

View More Analyst Ratings for GMCR
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Downgrades Price Target Reiteration Analyst Ratings Best of Benzinga

 

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