KeyBanc Defends Green Mountain Coffee Roasters, Has Buy Rating & $120 Price Target

Oct 20, 2011
J. Webster
Comments Off on KeyBanc Defends Green Mountain Coffee Roasters, Has Buy Rating & $120 Price Target

When a guy like David Einhorn makes a presentation about your company laying out the reasons why he’s short its stock, it’s time to worry. Einhorn isn’t some to discount easily. He doesn’t lay out a stock thesis with the plan to make a quick buck. Rather, he usually has a long term plan to hold the stock until it’s beaten down to a pulp. And he doesn’t abandon a thesis easily.

So, if you’re Green Mountain Coffee Roasters, or a current long term stock holder of Green Mountain Coffee Roasters, it’s somewhat of a relief to hear from one analyst who stands by your company and has a buy rating on the stock, even in the face of Einhorn’s scathing attack. In just one month the stock has dropped 40 points, going from $110 a share to now under $70 a share.

KeyBanc analyst says, “Although the short-thesis laid out yesterday comes from a very credible source and is extremely detailed and well argued, we believe that the overall premise of the argument is not new. Most of the issues that Mr. Einhorn raised (looming patent expirations, accounting restatements, SEC inquiry, selective disclosure and declining attachment rates) have always been concerns of ours, which is why we initiated coverage with a HOLD rating last December.

However, our subsequent upgrade (on February 15, 2011) and current positive view is predicated on our belief that GMCR has positioned itself well (in part by signing multi-year agreements with Starbucks (Nasdaq: SBUX) and Dunkin (Nasdaq: DNKN)) to continue to lead the rapid growth of the U.S. single-serve coffee market and is in the early stages of penetrating the broader non-carbonated beverage market.” (StreetInsider)

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