In a research report released today, Canaccord Genuity analyst Scott Van Winkle reiterated a Buy rating on Keurig Green Mountain Inc (NASDAQ:GMCR) with a $139 price target, after the company entered into an agreement to buy back 5.2 million shares from Lavazza for $623.6 million or $119.18 per share.
Van Winkle noted, “The move helps remove an overhang following a period of stepped-up selling activity by Lavazza that appears M&A-driven. Following the deal, Lavazza will maintain a 3% stake in GMCR.” The analyst added, “Beyond the GMCR share repurchase from Lavazza at $119, Coca Cola recently took delivery of the remaining tranche of shares from its follow-on investment dating back to May priced at approximately $130 per share.”
The analyst added, “Despite a slower debut for the Keurig 2.0 brewer, Keurig’s dominance of the market for home coffee brewers and its recovering K-cup market share is unchanged. We expect household brewer penetration to continue to grow meaningfully and the upcoming Keurig Kold launch to provide an incremental catalyst.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Van Winkle has a total average return of 15.4% and a 62.5% success rate. Van Winkle has a 27.2% average return when recommending GMCR, and is ranked #170 out of 3480 analysts.