Keurig Green Mountain (GMCR) Buy Rating Maintained at KeyBanc

KeyBanc reiterated a Buy rating on Keurig Green Mountain (NASDAQ: GMCR) with a price target of $175. Comments follow Q4 results.

Analyst Akshay S. Jagdale said, "We are reiterating our BUY rating and $175 price target for Keurig Green Mountain, Inc. (GMCR-NASDAQ) following the company’s 4Q14 earnings after the market close. 4Q14 results (sales, EBIT and adjusted EPS) were comfortably above our and consensus estimates, and management’s commentary was incrementally positive on all three of its major strategic goals, namely the launch of 2.0, non-licensed conversions/share gains and progress on the upcoming launch of Keurig Cold."

"Specifically, on the 2.0 launch, sell-in was up 8% while sell-through was equally strong according to management. As for share gains, management commented that a large majority of non-licensed brands have already been converted (some not yet announced) and that this number is expected to grow. Lastly, the Company announced that it is on track to launch Keurig Cold in the fall of 2015 (it is past the engineering stage and is into scaling its production on pods and machines) and that it expects the Cold installed base to build out faster than the Hot and to have a more global reach," continued the analyst.

"In light of the strong 4Q results and incrementally positive outlook commentary on both Hot and Cold platforms, we have increased confidence in our upside case long-term earnings power estimate of $8.12," he added. "We think perhaps the only disappointment was the Company’s FY15 and 1Q15 sales growth guidance. Management guided to high-single-digit growth in the 1Q (~11% lower than we were expecting and ~7% lower than consensus) and high-single-digit to low-double-digit growth in FY15 (~9% lower than we were expecting and ~5% lower than consensus). We attribute the lower than expected guidance mainly to conservatism. Nonetheless, EPS growth guidance was stronger than both our and consensus expectations."

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 $153.95 yesterday.

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