Why These 4 Starbucks Analysts Are Unphased By Q1 Earnings Miss

Zinger Key Points
  • Starbucks’s same-store sales in China is poised for growth with reopening, one analyst says.
  • The company exhibits the resiliency to achieve its long-term same-store sales growth target, another analyst states.

Shares of Starbucks Corporation SBUX remained under pressure in early trading on Friday, after the company’s fiscal first-quarter earnings missed expectations.

Stephens on Starbucks

Analyst Joshua Long maintained an Equal-Weight rating and price target of $91.

“Starbucks reported 1Q23 results that included strong trends in the U.S. (with positive traffic) from digital and cold beverages balanced by troubled, but improving same-store sales in China,” Long wrote in a note.

“Over the course of the year, we continue to expect sequentially lower margins in 2Q22 with room for margin expansion in the second half as China recovers and initiatives take hold within the current operating environment,” he added.

Wedbush on Starbucks

Analyst Nick Setyan reaffirmed a Neutral rating and price target of $110.

“The FQ1 U.S. comp of 10.0%, was driven by 9% avg. check growth and a 1% increase in transactions,” Setyan mentioned.

“We continue to expect improved customer mobility, investments in staffing levels/ training, operational initiatives aimed at increasing capacity and throughput, and favorable loyalty changes to drive SSS growth in the near- to medium-term,” he added.

Check out other analyst stock ratings.

KeyBanc Capital Markets on Starbucks

Analyst Eric Gonzalez reiterated a Sector Weight rating.

“Starbucks F1Q23 EPS missed consensus forecasts as results were weighed down by a 29% SSS decline in China equating to a ~$0.06 drag in EPS relative to prior assumptions,”

“Despite COVID-related headwinds in China that are likely to persist through F2Q, the Company preserved its full-year guidance due to strong SSS momentum outside China, outsized growth in licensed stores, and a modest boost from FX (relative to prior expectations),” he added.

Credit Suisse on Starbucks

Analysts maintained a Market Outperform rating and a price target of $122.

Starbucks’s US same-store sales reflected “ongoing momentum” and “should continue to support confidence in SBUX’s resiliency and ability to execute on its ambitious LT 7-9% SSS target,” Credit Suisse analysts wrote in a note.

“We expect continued US SSS outperformance, driven by the resiliency of SBUX’s habitual products that are increasingly difficult to replicate at home … We also believe better turnover, throughput and new equipment will help unlock capacity & improve operations, and contribute to SSS,” the analysts added.

SBUX Price Action: Shares of Starbucks had declined by 2.70% to $106.20 at the time of publication Friday.

Read Next: Starbucks CEO Issues Return to Office Guidelines for Corporate Employees: Three Days a Week

Photo: Courtesy Starbucks

Market News and Data brought to you by Benzinga APIs
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: Analyst ColorEarningsNewsPrice TargetReiterationRestaurantsTop StoriesAnalyst RatingsMoversTrading IdeasGeneralcoffeecoffee shopsCredit SuisseEric GonzalezJoshua LongKeyBanc Capital MarketsNick SetyanStephensWedbush
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!