Canaccord Genuity has decided to maintain its positive position in Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR). The firm’s analyst Scott Van Winkle has maintained a Buy rating and a $94.00 target despite the move from Starbucks Corporation (NASDAQ: SBUX) to launch a single-serve espresso brewer.
The report noted, “We expect several years of rapid revenue and earnings growth driven by rising penetration of Keurig single-cup coffee makers in North American households. Starbucks announced the launch of a single-serve espresso beverage brewer in a partnership with Kruegger GmbH & Co, outsourcing the brewer and production of the portion packs. The new brewer, Verismo, is complementary to Starbucks’ K-cups, but modestly competitive as well.
The thesis… “GMCR shares significantly over-reacted after hours on concerns of competition. The new system is a solution for lattes and espressos, which neither the K-cup brewers nor the new Vue can do. Starbucks noted Nespresso as its competition and neither Nespresso, nor CBTL’s espresso brewer, have impacted GMCR’s success.”
The belief is that this does not change the existing Green Mountain K-cup relationship and there is no impact on Canaccord Genuity’s forecasts.
Ahead of the opening bell, Green Mountain shares are down more than 14% at $53.40 in active trading.
JON C. OGG
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