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The world’s largest coffee chain Starbucks Corp’s (NASDAQ:SBUX) customer visitation is expected to go back to pre-COVID-19 levels for when the vaccine is widely available, according to a survey conducted by Cowen Equity Research.
The Starbucks Analyst: Cowen analyst Andrew Charles has an Outperform rating on Starbucks stock and raised the price target from $112 to $120.
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What Happened: Based on a survey involving 2,500 customers, the Cowen analysts expect minimal disruption to coffee shop visitations once the pandemic ends — prompting the firm to raise the price target to $120 from $112. It also added Starbucks as a favorite "reopening" stock.
See also: How to Buy Starbucks Stock
Cowen raised the quarterly same-store sales estimates for the Seattle-based coffee chain in the Americas (~90% U.S.) to 8%, 79% and 18% for the second, third and the fourth quarter of 2021, compared with its previous estimate of 7%, 76% and 14%.
The brokerage also revised the 2021-23 EPS estimate to $2.89, $3.50 and $4.02, compared with its previous estimates of $2.85, $3.40 and $3.89. It now forecasts 2021 revenue of $28.9 billion, near the high-end of the guided $28-$29 billion range, vs consensus of $28.5 billion.
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The Starbucks Thesis: Cowen sees Americas’ same-store sales as the key metric for Starbucks which has been relying more on delivery, new drive-thrus, product launches, and loyalty programs to make up for lost business after being hit by the second wave of COVID-19 infections and accompanying restrictions.
“We are encouraged by the implied stability suggested by respondents when comparing post-vaccine expectations to pre-COVID-19 habits,” Charles wrote in a research note.
“Starbucks is pursuing the right structural drivers to help transcend displaced morning routines, including broadening payment options beyond a gift card for customers to join the loyalty program, the addition of curbside pick-up to 22% of U.S. company-operated locations by fiscal 2021-end and on-trend plant-based menu innovation.”
Cowen also raises its 2023 estimate for operating margin to 19% from 18.6%.
In January, Starbucks said it expects second-quarter U.S. comparable sales to rise between 5% and 10% and in China, its biggest growth market, it forecast sales to grow nearly two-folds.
Price Action: Starbuck shares, which have risen 7% year-to-date, closed about 0.8% lower on Wednesday at $110.46.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.