Peet's Coffee & Tea Inc. (PEET) shares shot up Wednesday after an analyst speculated that the company will likely sell coffee for Green Mountain Coffee Roasters Inc.'s (GMCR) popular Keurig single-cup brewer.

Janney Capital analyst Mitch Pinheiro, who upgraded Emeryville, Calif.-based Peet's to buy from neutral on Wednesday, said a partnership between the coffee companies could be unveiled as soon as Sunday.

In early afternoon trade, Peet's shares jumped 7% to $45.88. Green Mountain shares rose 0.4% to $40.51.

"We believe adding [Peet's] to the Keurig platform would have the same or greater impact in California as adding Starbucks," Pinheiro wrote in a research note.

Shares of Starbucks Corp. (SBUX) fell 1% to $31.95 in Wednesday afternoon trade.

Peet's has strong brand recognition on the West Coast. Green Mountain's market share in West Coast grocery stores is minimal.

Pinheiro estimates a deal would add $1 a share to Peet's earnings in 2012, valuing the stock at $57 a share on his fair-value calculation. He said he has no knowledge of any agreement, but he pointed out that Peet's tried to buy Diedrich Coffee Roasters of Irvine, Calif. That developed into a bidding war that Green Mountain eventually won last May. Prior to the acquisition, Diedrich held a license to make coffee for the Keurig brewer.

Spokeswomen for Peet's and Green Mountain said their companies don't comment on rumors.

In recent months, there has been heated speculation over future partnerships and other moves by companies in the fast-growing single-cup brewer market, especially since Starbucks said last November it was ending its supermarket-distribution deal with Kraft Foods (KFT) .

Most recently, Dunkin' Donuts on Feb. 22 said it will make coffee for use in Green Mountain's Keurig brewer. The K-Cup portion packs used for the Keurig machine will be sold in 14-count boxes at Dunkin' Donuts stores in the U.S. and Canada starting this summer.

On Feb. 15, Starbucks struck a deal with Courtesy Products to provide its ground coffee for Courtesy's single-cup machine used in more than 500,000 U.S. hotel rooms.

In a memo to employees, Starbucks Chief Executive Howard Schultz said the single-cup market is a $4 billion market segment that is the fastest-growing in the global coffee industry. He said 80% of Starbucks customers don't own a single-serve coffee machine in their homes.

Green Mountain currently dominates the single-cup coffee machine market in the U.S.

-Matt Andrejczak; 415-439-6400; AskNewswires@dowjones.com
Peets Coffee & Tea, Inc. (MM) (NASDAQ:PEET)
Graphique Historique de l'Action
De Sept 2024 à Oct 2024 Plus de graphiques de la Bourse Peets Coffee & Tea, Inc. (MM)
Peets Coffee & Tea, Inc. (MM) (NASDAQ:PEET)
Graphique Historique de l'Action
De Oct 2023 à Oct 2024 Plus de graphiques de la Bourse Peets Coffee & Tea, Inc. (MM)