Analyst Slashes Green Mountain (GMCR) Target to $52 Amid Slowing K-Cup Growth; Raises Estimates on Starbucks (SBUX)

Following recent channel checks, Piper Jaffray analyst Nicole Miller Regan has raised estimates on Starbucks Corporation (Nasdaq: SBUX) while at the same time lowering estimates on Green Mountain (Nasdaq: GMCR).

Regan believes Starbuck's single serve offering Via is performing strongly over the holiday season. This comes in contrast to K-cup sales growth which the analyst believes is slowing. Regan is now modeling for year-over-year K-cup sales growth of 30 percent, down from 45 percent previously.

The Piper Jaffray analyst raised her FY12 EPS estimate on Starbucks from $1.75 to $1.82, which compares to the Street estimate of $1.83. Regan maintains an Overweight rating and $55 price target on shares of Starbucks.

Regan maintained a FY12 EPS estimate of $2.60 on Green Mountain, but lowered her FY13 estimate from $3.87 to $3.64, right inline with the current analyst consensus estimate. Amid a new PE multiple of 20x (down from 45x previously), Regan absolutely slashed her price target on Green Mountain shares from $117 to $52. The analyst said the valuation is reasonable given recent investor concerns over patent and competitive issues which have pressured the stock over the last quarter." Regan reiterated an Overweight rating on Green Mountain.

Traders seem to be responding to the note Tuesday morning: while Starbucks shares are up 2.9 percent to $44.88 at last check, Green Mountain shares are down 1.3 percent to $45.34.

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