Keurig Green Mountain (GMCR) Price Target Trimmed at UBS

UBS maintained a Buy rating on Keurig Green Mountain (NASDAQ: GMCR) but trimmed its price target to $160.00 (from $168.00). Analyst Stephen Powers continues to see attractive risk/reward, but in his view the stock may not be for the faint of heart.

"We have updated our Keurig 2.0 Sentiment Tracker. Superficially, average 2.0 ratings have improved from 3.07 to 4.11 since late-Dec. However, GMCR has engaged in aggressive review "polishing" practices: 1) utilizing Influenster, 2) offering free K-cups for reviews, 3) "piping in" reviews from Keurig.com into 3rd-party sites. Still, even filtering out influenced reviews, we see improvement in avg. 2.0 ratings (2.49 in FYQ1 to 3.13 in FYQ2), which is a more modest but still meaningful representation of 2.0's improved positioning. That said, 2.0 reviews are still well-below older brewer ratings," said Powers.

The analyst continued, "Coming out of FYQ1, we indicated that GMCR needed to speed efforts to reaccelerate 2.0 coffee brewer sales by H2. Pleasingly, GMCR seems to have received the message (beyond the review management discussed above, it has created a cheaper/smaller brewer, launched a layaway plan, upped promotions, signed on new partners, debuted a recyclable K-Mug). However, we (and the market) still have lingering concerns over GMCR's ability to make up FYQ1 brewer shortfalls without even more aggressive/costly actions. Progress was not expected to be robust in FYQ2 (and indeed, intimated NPD data still appears sluggish), but hearing confirmation that GMCR remains on track to normalize inventory and resume brewer growth in H2 will be key in the coming weeks."

For an analyst ratings summary and ratings history on Keurig Green Mountain click here. For more ratings news on Keurig Green Mountain click here.

Shares of Keurig Green Mountain closed at $116.14 yesterday.

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