Stifel analyst Mark S. Astrachan upgraded his earnings estimates for Green Mountain Coffee Roasters Inc. Monday, despite an otherwise dim view of the company's prospects.
THE OPINION: The analyst said lower coffee costs should help Green Mountain in the near term, which will offset what he sees as weakening fundamentals at the coffee roaster.
Astrachan said the company's sales gains are likely to continue to slow, as the number of households that already own the Waterbury, Vt.-based company's brewing system increases, along with pressure from unlicensed brands and the negative impact of lower prices and mix of products sold.
He maintained a "Sell" rating on the stock.
Green Mountain, the maker the Keurig single-cup brewing system and related K-Cup pods, is expected to report its fiscal second-quarter earnings results on Wednesday.
The analyst increased his full-year forecasts for the company, citing lower coffee prices. He expects Green Mountain earn $2.95 per share for 2013 and $2.83 per share for 2014, up from $2.80 and $2.71 per share, respectively. Analysts on average, were expecting earnings of $2.82 per share for 2013 and $3.22 per share for 2014, according to financial data provider FactSet.
Astrachan forecast earnings of 80 cents per share for the second quarter, above market expectations of 72 cents per share.
THE STOCK: Shares increased 88 cents to $58.96 in afternoon trading after hitting as high as $59.56 earlier in the session. The company's stock, which has been gaining all year, is at the high end of its 52-week trading range of $17.11 to $59.62.