Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) shares have performed handily from the bottom of 2013. After all, the stock is up more than 100% from the 52-week low of $38.73. Now we have an unusual analyst Sell rating being issued, and the source of that rating is unusual as well.
S&P Capital IQ has issued a Sell rating on the independent coffee roasting and retail product player. The stock is holding up rather well so far, in part because S&P Capital IQ is truly independent research that generates no actual brokers calling clients to say “Sell, Mortimer! Sell!” when it generates research notes.
After the stock closed at $79.41, S&P Capital IQ has set a 12-month price target of $75.00 on it. Most Sell ratings would have a lower price target than just 5% under the current price, so it is possible that investors and traders may view this simply as a Neutral rating regardless of the title. We would point out that the consensus price target is north of $90 for this stock.
S&P Capital IQ believes that this price target reflects its view that the stock should receive a target P/E on estimated earnings per share of $3.85 for calendar 2014. This would put it in-line among food- or beverage-related stocks.
S&P Capital IQ even went on to say that it has been impressed by Green Mountain’s strength in the single-serve coffee market. At the same time, the report shows risks related to the company’s plans for new beverage systems limiting valuation of the stock.
All in all, this is one of those reports that seems worse than it really is. This feels like more of a Neutral rating than an outright Sell rating, but we do not really like to tell issuers that they picked the wrong rating after their outlooks.
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