Stephens' Analyst On Starbucks: 'Continue To Look For A Better Entry Point'

Starbucks Corporation SBUX reported third-quarter earnings in line with consensus on Thursday, with EPS coming in at $0.55 and $5.7 billion in sales.

Comps were just below the Street’s expectations, growing 5 percent in the Americas compared to 5.2 percent consensus.

The stock initially spiked 4.7 percent on the news, but quickly dropped afterward.

Following the report, Stephens analyst Will Slabaugh reiterated an Equal-Weight rating on the company and $58 price target (see his track record here).

The analyst credited acceleration in top-line growth to mobile and payment developments and growth in the cold brew and lunch product categories.

Slabaugh also noted the China proved to be an area of continuing opportunity for the company, especially as Starbucks acquires all of its licensed stores.

However, Slabaugh said he “would continue to look for a better entry point.”

Domestics comps slid over the course of Q3 and management trimmed global comp guidance for Q4 to 3–4-percent growth, outweighing the long-term opportunities in Slabaugh’s opinion.

The analyst pulled back his fiscal 2017 EPS estimate from $2.11 to $2.06 and same-store sales estimate from 4 percent to 3.8 percent growth.

At time of publication, shares of Starbucks were down 7.39 percent at $55.10 in Friday's pre-market session.

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