UPDATE: BMO Capital Markets Reiterates Outperform Rating, Raises PT on Starbucks Corporation
In a report published Monday, BMO Capital Markets reiterated its Outperform rating on Starbucks Corporation (NASDAQ: SBUX), and raised its price target from $56.00 to $60.00.
BMO Capital noted, “We liked the sales acceleration in August (particularly in the US) and the 165 bp improvement in consolidated EBIT margin (to 15.4%, which was ~50 bp better than our forecast). We were particularly impressed with the 21.4% margin achieved in the Americas (up 200 bp yr/yr and 140 bp better than our forecast) and the ability to maintain 30%-plus margins in the CPG segment despite heavy capital investment to support future growth. On the surface, the over 300 bp EBIT margin declines in EMEA (a 2.3% loss) and CAP (still a healthy 32.5%) were disappointing. However, ex-items, the EMEA margin was +5.0%, meaningfully better than previous trend. And, new unit opening expenses related to accelerated company-owned China growth accounted for most of the margin pressure in the CAP segment. Ultimately, we liked the EPS beat and increased guidance, reflecting accelerated global growth prospects.”
Starbucks Corporation closed on Friday at $50.84.
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