Green Mountain Coffee Forecast: Not Decaf

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Forbes.com, Fall, 2011. This article was placed on behalf of the U.S. based equity research effort of institutional broker and investment bank Canaccord Genuity. It was part of a series of articles developed under an agreement with forbes.com to work with a variety of contributors and assist them in delivering actionable investment ideas each week. The site, forbes.com is one of the top 500 sites in the world with nearly 10 million subscribers and approximately 100 million page views a month.

Canaccord Genuity analyst Scott Van Winkle released a Q4 preview where he reiterated his Green Mountain Coffee BUY rating and $120 price target. Mr. Van Winkle said:

“We expect several years of rapid growth, driven by rising penetration of Keurig single-cup coffee makers in coffee-drinking households that should drive higher revenue growth and even higher rates of earnings growth as the margin story unfolds.”

According to a survey by the National Coffee Association, 81% of consumers surveyed responded with a favorable impression of single-serve coffee, and purchase intent is rising.

Regarding the fourth quarter, Mr. Van Winkle’s forecast is as follows:

-Revenue of $753.7M, up 102% from $373.1M last year.
-EPS of $0.48 excluding amortization, up from $0.24 last year.
-Brewer shipment growth in units to 1.8M vs. 1.2M in Q4 last year.

He added, “Dunkin’ (DNKN) advertising support is the unappreciated asset and Starbucks’ (SBUX) “on-time” launch should add to holiday momentum.”