Starbucks' Ambitious Plans Trigger 9% Price Target Hike By This Analyst

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  • Morgan Stanley analyst John Glass reiterated an Equal-Weight rating on the shares of Starbucks Corp SBUX and raised the price target to $96 from $88.
  • The analyst said the company's Investor Day outlined ambitious but credible plans to revamp U.S. stores to accelerate sales growth.
  • The financial targets strike the analyst as achievable but ambitious and set a high bar that some may view as creating an overhang.
  • Also Read4 Starbucks Analysts React To Investor Day: 'Attractive Risk-Reward And Valuation'
  • The analyst anticipated acceleration in U.S. unit growth as the company seeks to meet demand and, importantly, expand its range of store formats to adapt to today's channel mix- these include drive-thru primary stores, delivery-only stores, and pick-up stores.
  • Same-store sales goal of the company seems possible but with seemingly little wiggle room for either execution or macro issues.
  • The analyst sees the company's initiative to invest in stores and operations as a key unlock for sales and labor productivity.
  • Unionization was addressed only briefly and remains a challenge, though not one that is worsening.
  • In the U.S., focusing on premium beverage innovation, customization, digital enhancements, and operational efficiencies should help the top line, though targets allow little room for error.
  • Price Action: SBUX shares are trading lower by 0.37% at $92.36 on the last check Thursday.
  • Photo Via Wikimedia Commons
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