Stifel Upgrades Starbucks To Buy, Expects Comps To Hit 6%

According to Astrachan, Starbucks' U.S. comp store sales growth is expected to grow to at least 5 to 6 percent for at least the next four quarters beginning in the fiscal (June) third quarter. The analyst believes this figure is achievable given the company's beverage innovation, greater food options and new technology offerings including the mobile app. Outside of the United States, Astrachan is estimating Starbucks' global comps to grow "modestly below" the U.S. levels but still achieve a mid-single-digit.

Packaged Goods Story Underappreciated

Astrachan's upgrade is also supported by Starbucks' "considerable" opportunity to expand its packaged coffee and tea and ready-to-drink beverages. Currently, these offerings account for around 9 percent of total sales and also 19 percent of EBIT. Related Links: The Fabled Starbucks Unicorn Frappuccino: 'It's Like Watered-Down Cotton Candy' The Bull-Bear Debate On Starbucks Still Brewing

Specifically, the coffee chain's high-margin grocery business represents a "unique asset" and can achieve a sustainable double-digit growth rate through existing North American stores. In addition, the analyst believes that Starbucks could see growth in the international markets through a partnership with Nestle or JAB Holdings — the largest and second largest global coffee companies within the coffee/tea and single-serve market.

Bottom line, Starbucks' stock has "meaningfully under-performed" consumer and restaurant stocks over the past year and merely meeting consensus estimates will help Starbucks' stock outperform.