Amid Mixed Reaction To Q4, Starbucks Remains A Best-In-Class Growth Story

Goldman Sachs maintains its Buy rating on Starbucks Corporation SBUX after the company reported solid results amid the ongoing restaurant industry slump.

However, global same store sales of 4 percent missed consensus view of 4.8 percent. The world's largest coffee chain’s same-store sales in the U.S.-led Americas region rose 5 percent for the fourth quarter, in line with consensus. In the same quarter last year, both global and U.S. comps grew 8 percent.

For the first quarter, Starbucks expects EPS of $0.51–$0.52 (consensus: $0.55). For FY17, the company sees EPS of $2.12–$2.14 versus consensus expectations of $2.16.

“We think F4Q results and guidance data points continue to confirm SBUX as a best-in-class growth story, including: EPS guidance within the L/T range despite growing partner investments, 6 percent comps in China, and growing net unit additions with only positive commentary on unit economics,” analyst Karen Holthouse wrote in a note. 

The analyst pointed out that the company continues to see stronger comps at stores driving capacity, and believes the digital pipeline is not exhausted.

Though acknowledged concerns on back-half weighted FY 2017 comp guidance, Holthouse said “a comp that “rounded down” to a 4 percent and an accelerating 2-year trend should reassure investors that no ongoing underlying deceleration is taking place.”

Also, Holthouse believes there is no need to worry about a shift in focus to Reserve from the “core” offering, as similar concerns on food/tea were proven as unnecessary concerns.

That said, the analyst cut her price target by $3 to $66, while the stock was up 2.62 percent to $53.12 at last check.

Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: Analyst ColorEarningsLong IdeasNewsGuidancePrice TargetReiterationRestaurantsAnalyst RatingsMoversTrading IdeasGeneralGoldman SachsKaren Holthouse
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...