UPDATE 1-Green Mountain roasted on SEC probe; analysts unfazed

* Shares fall as much as 18 pct on news of SEC inquiry

* Analysts confident of co’s revenue recognition policies

BANGALORE, Sept 29 (Reuters) - Shares of Green Mountain Coffee Roasters Inc GMCR.O fell as much as 18 percent on Wednesday, a day after it said U.S. regulators made an inquiry into some of its revenue recognition practices and its relationship with a vendor, which analysts said was M.Block & Sons.

However, most analysts believe Green Mountain’s accounting policies are sound.

“We are comfortable with Green Mountain’s revenue recognition policy, the fact that it does not have control over M. Block & Sons, unquestioned management integrity and strong auditors (PricewaterhouseCoopers),” Janney Montgomery Scott analyst Mitchell Pinheiro said.

Piper Jaffray analyst Anthony Gikas said Green Mountain ships and maintains inventory at M.Block, but records a sale only when the vendor ships the brewers to retailers.

“From an arm’s length, we think the accounting process is sound,” Gikas said in a note to clients.

Canaccord Genuity analyst Scott Van Winkle agreed: “Given our understanding of how sales are accounted for that are fulfilled by M Block, we can’t see an issue.”

Van Winkle and Pinheiro backed their “buy” rating and Gikas kept his “overweight” on the stock.

All three analysts see the correction in shares today as a buying opportunity.

The maker of the single-cup Keurig brewers relies on a single vendor, M.Block & Sons Inc, to distribute products for its single-cup business to retailers, according to its last annual filing with the U.S. Securities and Exchange Commission on Sept. 26, 2009.

M.Block accounted for about 51 percent of the company’s accounts receivable balance, according to the filing.

On Tuesday, the SEC’s Division of Enforcement sought voluntary production of documents and information from Green Mountain, which said it was cooperating fully with the SEC staff. [ID:SGE68R0N0]

Shares of Waterbury, Vermont-based Green Mountain were down 17 percent at $30.76 Wednesday morning on Nasdaq, on volumes nearly seven times their 10-day moving average. They touched a 52-week high on Tuesday, before the company reported the SEC investigation.

On Monday, the company's shares jumped to a then lifetime high on rumors of a takeover by food giant Nestle SA NESN.VX. [ID:nSGE68Q0KR] (Reporting by Mihir Dalal and Abhishek Takle in Bangalore; Editing by Anne Pallivathuckal and Don Sebastian)