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Oppenheimer & Co. analyst Brian Bittner confirmed his firm’s Outperform rating on Starbucks as the company recovers from a three-month low of $43.16 hit on August 2. Bittner highlights cheaper prices for wholesale coffee beans as essential for a higher Earnings Per Share in 2013 and 2014. Starbucks shares rose 1.6 percent on Wednesday after Bittner’s comments.
Changes in how consumers get their cup of Starbucks coffee also signaled positives to analysts. Starbucks plans to launch Verismo, a single-cup machine for making espresso-based beverages at home, later this year. Also, in August the company signed a partnership with Square to enable mobile payments at its 7,000 U.S. stores.
Investing Insights: These New Entrants are Looking to Harness the $8 Billion Energy Drink Market.
Green Mountain Coffee Roasters Analysis
Shares of Green Mountain Coffee Roasters are following a similar trajectory. Despite shares being down 45 percent year-to-date, Lazard Capital began its coverage of the coffee company this morning with a Buy rating. Lazard gave the stock, which opened this morning at 25.28, a target of $39 per share, and shares jumped up 11.3 percent.
Like Oppenheimer, Lazard Capital based its high price target for Green Mountain on the potential of its new line of single-serve Wellness Brewed beverages which contain antioxidants and vitamins. The beverage can be brewed in Green Mountain’s line of Keurig single-serve brewing machines. The company released the product amid increasing competition for single-service coffee drinks and as its patent on k-cup technology is about to expire.
“We recognized an opportunity to help consumers simplify their wellness routines in a way only GMCR could offer – with great beverages at the touch of a button,” says Lawrence J. Blanford, GMCR’s President and CEO in a statement.
The only area where analysts find issue with both companies is with the change in consumer behavior during the prolonged recession.
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