Zacks Investment Research downgraded shares of Keurig Green Mountain Coffee Roasters Inc. (GMCR) from OUTPERFORM to NEUTRAL on March 14, 2014, with a target price of $111.00.
We return to a Neutral recommendation from Outperform based on decline of brewers and accessories revenue for the past few quarter due to rising competition post patent expiration in 2012. However, adjusted earnings of $0.96 per share beat both the year-ago quarter levels and the Zacks Consensus Estimate. The earnings upswing came on the back of operational efficiencies and higher single serve pack sales. We remain impressed with the company's recent strategic distribution agreements with major beverage companies to bring more popular brands into its K-cups and Vue packs portion cup business. We are encouraged with stabilizing coffee prices and the cost reduction initiatives. Moreover, the company is stepping into the growing soda category with its single-serve brewing convenience.Its upcoming Keurig 2.0 model with an anti-lock technology is expected to help it maintain dominance in the single-serve category in the future.
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