UPDATE: Bank Of America Reiterates On Keurig Green Mountain Ahead Of FY4Q14 Results

In a report published Monday, Bank of America analyst Bryan D. Spillane reiterated a Neutral rating on Keurig Green Mountain Inc (NASDAQ: GMCR), and raised the price target from $145.00 to $160.00.

In the report, Bank of America noted, “GMCR is expected to report FY4Q14 results after the market closes on 11/19/14. We are forecasting sales growth of 12.2% (Portion packs +15%/Brewers and accessories +14%), operating profits +16.8% (SG&A +$25m vs 4Q13). Our EPS estimate is at the top end of management's guidance range ($0.75) mainly due to our view that the company is likely to have offset more of the KO and Lavazza dilution. We expect management to provide annual guidance for FY15. Our current forecast of $4.00 assumes ~$0.13 dilution from KO and Lavazza and $0.17 of investment related to the launch of Keurig Cold. This implies underlying EPS growth of 13% driven by 18% sales growth in portion packs and 6% growth in brewers. Key items likely to swing FY15 are 1) Keurig 2.0 launch and its impact on extending household adoption growth 2) efficacy of portion pack price increases including consumer demand elasticity, competitor pricing actions (it appears to be lagging as of now) and 3) impact of rising coffee costs (75% hedged as of 3Q earnings call).”

Keurig Green Mountain closed on Friday at $154.27.