Keurig Green Mountain (GMCR) Price Target Trimmed at UBS

UBS maintained a Buy rating on Keurig Green Mountain (NASDAQ: GMCR) and lowered its price target to $168.00 (from $182.00). The change follows soft Q1 results. Despite poor holiday results, analyst tephen Powers remains positive on the stock.

"Brewer volumes (-12%) were the main source of disappointment, which GMCR attributed to the Dec. MINI Plus recall (400K units), and to lower-than expected 2.0 demand—due mostly to negative reviews regarding its unlicensed brand lockout feature. GMCR also indicated that weak Q1 retail sales and related destocking will further lead to a ~-20+% decrease in brewer volumes in Q2."

"While Q1 results and the Q2 brewer outlook indeed appear grim, GMCR was confident on the call and in discussions following it that 2.0 issues could be managed, and that the Hot installed base would continue to grow "+mid-teens". Aligned with our thinking, GMCR's data suggests that as new partner brands enter the system (and as consumer communication improves), K-Cup non compatibility objections should abate, and they (like us) have seen signs of improving 2.0 sentiment already. We were actually pleased to hear that ~50% of Q1 brewer sales were to new users, and are constructive on GMCR's decision to launch a lower-priced brewer ($100-$120) in April (which should help overcome price-point objections). However, it's simple: GMCR must deliver," he added.

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 $121.20 yesterday.

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