Meetings with Starbucks Corporation SBUX management increase confidence in the company returning to 5 percent comp growth in the Americas in 4Q, RBC Capital Markets’ David Palmer said in a report. He maintained an Outperform rating on the company, with a price target of $68.
Improving Execution To Drive Comp Growth
Analyst David Palmer mentioned that meetings with management highlighted three factors that had resulted in Starbucks achieving only 4 percent SSS in the Americas in F3Q. These are:
- A slowdown in the My Starbucks Rewards adoption rate and mobile usage growth, with consumers getting acclimated to the new app
- Increased consumer uncertainty
- A mis-execution of the Frappuccino happy hour
Management noted that of the three factors, only macro uncertainty was beyond its control. Palmer expects the negative effects from the new Rewards app to continue to fade, while other digital marketing efforts would likely bolster sales. He added, “In short, the company sounded confident that with improved execution it would hit its 5% target for F4Q.”
Expectations For 2017
The EPS estimate for 2017 has been reduced from $2.20 to $2.15. The analyst cited the reason for the lowered estimate as being “more conservative as the company continues to make partner wage investments and laps a 53-week year (2pp headwind).” He forecasted 8 percent revenue growth and 13 percent EBIT growth.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.