Green Mountain Shares Jump 10% on Zachs Upgrade

Green Mountain Shares Jump 10% on Zachs Upgrade
By Keurig Green Mountain, Inc. [Public domain], via Wikimedia Commons

The shares of  Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) increased by more than 10 percent to $27.04 per share during the midday trading on Monday, following reports that its stock rating was upgraded by Wall Street analysts.

Analysts from Zachs Investment Research upgraded its rating for Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) from “underperform” to “neutral” and initiated a $25 price target on the stock.

Green Mountain Shares Jump 10% on Zachs Upgrade

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In a research note to investors, Zacks analysts wrote, “We are upgrading our recommendation on Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to Neutral from Underperform, as we are encouraged by the company’s efforts to turnaround its business. The company is geared up to make its Keurig single-cup brewing system popular to face increased competition. Apart from upgrading its Keurig brewing technology, it has launched many affordable Keurig models to attract more customers.”

In addition, the analysts said, “The company has also entered into several strategic distribution agreements to rope-in more popular brands like Dunkin Donuts and Starbucks Corporation (NASDAQ:SBUX) into its portion pack systems.”

Furthermore, the analysts emphasized that they are encouraged by the stabilizing prices of the company’s coffee products and its strong brand portfolio. According to them, they have faith in the company’s long-term prospects, despite the sluggish financial performance during the previous quarters.

On the other hand, analysts at Dougherty and Co. also upgraded their stock rating for the company from “neutral to “buy” with a $35 price target. Analysts at Longbow Research maintained their buy rating on the stock, with a $45 price target while analysts at Lazard Ltd (NYSE:LAZ) initiated a buy rating and a $39 price target.

Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) recently announced the launching of its new single-cup espresso brewer called Rivo in partnership with Luigi Lavaza SpA. Some analysts believe that the new product could wash out the criticism against the company, particularly from David Einhorn, hedge fund manager of Greenlight Capital.

Last month, Einhorn once again attacked Green Mountain’s accounting methods in his latest letter to shareholders. The hedge fund manager previously raised issues regarding the company’s accounting practice in public. According to him, it is implausible for Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) accounting committee to finish its audit within 23 days.

Meanwhile, Einhorn also stated that Chipotle Mexican Grill, Inc. (NYSE:CMG) is overvalued and it is trading at a high multiple.

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