There's Enough Positives In Starbucks' Quarter To Outweigh Near-Term Woes

Based on the more than 7-percent decline in Starbucks Corporation SBUX's stock investors concluded that the bad aspects of its fiscal third-quarter earnings report outweigh the good — but the opposite is true, at least according to BTIG's Peter Saleh.

Food Sales

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Saleh maintains a Buy rating on Starbucks' stock with an unchanged $64 price target as there is no reason to doubt the company's ability to continue growing its earnings per share in the low to mid-teens over the longer term. Granted, management's lower earnings guidance and a more tepid sales growth forecast are legitimate concerns but any opportunity to lower its long-term plans will actually be "welcome news" for investors.

Digital Engagement

One of the encouraging aspects of Starbucks' earnings report is a strong digital engagement, Saleh continued. This is especially true in the important China where sales grew 7 percent due to greater digital engagement and the launch of mobile payments.

Starbucks has very ambitious long-term plans for China, including expectations for the market to be bigger than the U.S. market.

Food sales were also singled out as a bullish sign as it accounted for 21 percent of overall sales, the analyst added. This added a 200-basis-point contribution to comps while beverage innovation contributed 300 basis points.

At last check, shares of Starbucks were down 7.36 percent at $55.12.