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Morgan Stanley Maintains on Starbucks

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In a report published Friday, Morgan Stanley analyst John Glass maintained an Overweight rating on Starbucks (NASDAQ: SBUX), with a $94.00 price target.

According to the report, strong results given broader retail conditions, led by outsized US profits growth. Fears of slowing US sales were partially realized but will likely be shrugged off given both SBUX's relative outperformance vs retail peers and what is likely an upcoming bounce from gift card sales.

“FY14 increased 2 - 4c, but includes the unexpected 1Q 2c benefit so the real increase is more moderate,” the report noted. “Pacing of quarterly EPS is slightly different than we'd modeled, with slower growth in the 3Q and picking up pace in the 4Q. 2) Green coffee visibility improving in ‘15 with ¼ needs locked at lower prices Y/Y though we'd expect incrementally less benefit than ‘14. 3) Boulange roll out hasn't affected speed of service, according to mgmt, though consumer perception may differ; lunch roll out likely late in F‘14 or early ‘15. 4) Carbonated beverages, another sales driver, rolls to ~1/2 the system this summer, with balance slated for summer 15.”

SBUX closed Thursday at $75.70 with shares trading up at 3.05 percent.

Latest Ratings for SBUX

DateFirmActionFromTo
Jul 2019MaintainsNeutral
Jul 2019Initiates Coverage OnBuy
Jul 2019DowngradesOutperformNeutral

View More Analyst Ratings for SBUX
View the Latest Analyst Ratings

Posted-In: John Glass Morgan StanleyAnalyst Color Reiteration Analyst Ratings

 

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