SunTrust Robinson Humphrey Initiates Green Mountain Coffee Roasters (GMCR) with a Buy

August 8, 2008 7:55 AM EDT

SunTrust Robinson Humphrey initiates coverage on Green Mountain Coffee Roasters (NASDAQ: GMCR) with a Buy rating and a $45 price target.

The firm said, "In our opinion, the company is uniquely positioned to not only ride the growth of the specialty coffee market, which continues to outpace the overall market, but also the single serve segment, which is in the infant stages of growth. GMCR's combination of Keurig brewers, patented K-cups and Green Mountain specialty coffee provide the company with: 1) significant multi-channel growth potential; 2) a highly profitable recurring revenue stream; and 3) strong opportunity to expand its core coffee franchise beyond its primarily Northeastern footprint."

The firm does not see a meaningful slowdown in the near term after the company grew its revenue base by 57% in FY07 and 46% YTD in FY08. Also, while the firm notes that Keurig is the top selling single serve brewer in the country, it only accounts for 3% of at home coffee makers and 6% of office brewers.

Green Mountain Coffee Roasters, Inc., through its subsidiaries, engages in roasting, packaging, and distributing roasted coffee primarily in the northeastern United States.

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