Analysts are shocked — shocked – that Green Mountain Coffee Roasters (GMCR) is taking such a beating today. many have rushed to the company’s defense, but the market clearly couldn’t care less today. Shares of the Keurig and K-Cup coffee company are down 40% to $40.52 per share in late afternoon trading.
Green Mountain has been under pressure since short-seller David Einhorn called the company’s growth prospects and accounting into question at a conference last month. But today’s massive drop has more to do with a revenue shortfall, which the company blamed on a change in ordering patterns for its K-Cup coffee packets.
Roth Capital Markets� analyst Anton Brenner called the market’s reaction “ridiculous.”
“[GMCR] management noted that retail sales trends remained on target throughout the quarter, implying that some retailer inventory levels had changed. One obvious explanation is that the company pre-announced a K-Cup price increase during Q3 and some large chains probably built inventory prior to the raise. If so, this implies absolutely nothing regarding future sales trends, and the subsequent one-third decline in the share price offers an unusually attractive buying opportunity in our view.”
Another analyst also saw the stocks’ move as way out of proportion.
“We would understand a negative reaction to missing top line guidance, but the trading in after-hours does not match the magnitude or significance of the revenue miss,” Janney Capital Markets analyst Mitchell Pinheiro wrote after the miss. “In our view, GMCR�s outlook has never been better.”
Bank of America/Merrill Lynch analyst Bryan Spillane notes that the company’s margins have expanded and that end demand appears strong.
“We continue to believe end demand signals indicate that momentum has not broken,” he writes, maintaining his Buy rating.
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