Zacks Investment Research downgraded shares of Green Mountain Coffee Roasters (GMCR) from NEUTRAL to UNDERPERFORM on August 22, 2012, with a target price of $23.00.
We are downgrading our recommendation on Green Mountain Coffee Roaster from Neutral to Underperform following lower-than-expected sales and margin performance in fiscal third quarter 2012. Though sales grew from year ago levels, it missed the Zacks Consensus Estimate by 1%. Gross margin also contracted due to lower-than-expected production of K-Cup portion packs which led to under-utilization of current manufacturing base. Following the sluggish third quarter results, the company lowered its earnings and sales guidance for the fiscal 2012. It also issued first-time fiscal 2013 guidance reflecting further deceleration. To add to the woes of the company, coffee prices remain at high levels which is crippling the margins of the company. Moreover, over dependence on Keurig brewers, which are facing increasing competition, also concerns us
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