Bearish Analyst Cuts Estimate on Green Mountain (GMCR) Amid Pricing, Competitive Concerns

July 13, 2012 8:34 AM EDT
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Price: $91.67 --0%

Rating Summary:
    6 Buy, 18 Hold, 3 Sell

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    Up: 1 | Down: 5 | New: 3
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Shares of Green Mountain (Nasdaq: GMCR) are set to continue trading lower Friday as comments from Stifel Nicolaus' Mark Astrachan are weighing this morning.

The stock last traded at $20.43, down about 4 percent from Thursday's close. Shares have tumbled nearly 18 percent over just the last five trading sessions.

Citing recent scanner data from IRI, the analyst warned of pressure on K-Cup pricing and increased promotional activity which will result in market share loss. Astrachan sees a "meaningful" negative impact on results if management does not change input costs materially. He also suggested a number of additional retailers could introduce private-label products as early as fall of this year.

The Stifel analyst noted sales of the Keurig Vue have "underwhelmed" since the launch in March.

Astrachan reduced his FY13 EPS estimate for Green Mountain by nearly 21 percent from $2.27 to $1.80. A consensus of analyst estimates currently sees Green Mountain reporting FY13 EPS of $2.37.

Stifel Nicolaus maintains a Sell rating and $14 fair value estimate on shares of Green Mountain.

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