stocks rose early Friday after Wedbush said in an update that the coffee giant will emerge from an even stronger Covid-19 pandemic in the U.S. and China.
Analyst Nick Setyan raised his rating on Starbucks (ticker: SBUX) to Outperform from Neutral, and raised his price target to $ 124 from $ 108. He argues that the company’s sales are recovering sooner than expected, which could lead to a more bullish view from management.
Starbucks rose 1.3% to $ 109.05 in recent trading. The shares are up 0.6% year to date, although they have gained 85.5% in the last 12 months. Other analysts have also been getting more bullish on the shares as the economy reopens.
Recent research by Setyan reveals that sales in the same store could be ahead of consensus estimates, and Starbucks also has an easy comparison in the coming months, due to a cafe closure that was imminent. surfaced in early 2020. That leads to the belief that there is an upside for comparable sales in the company’s second fiscal quarter, which ends this month. While Starbucks took a 5% to 10% growth range, Setyan is making models for 10%, up from its previous 9% estimate.
In addition, Starbucks previously posted full-year earnings per share of $ 2.70 to $ 2.90, noting that it may change as the company gained more visibility in its second fiscal quarter. Setyan believes ongoing cost controls and positive trends are going well for regulation increasing the full-year forecast. Setyan increased its EPS estimate to $ 2.90 from $ 2.87 for the full fiscal year 2021. It also increased its 2022 fiscal estimate to $ 3.48 a share from $ 3.43, and its 2023 fiscal estimate to $ 3.92 a share from $ 3.83.
Ultimately, he argues, Starbucks ’move looks steady this year and beyond in both the major U.S. and Chinese markets. Coming out of the pandemic, Starbucks has more data on its customers ’spending habits, more efficient driving locations, and fairer urban and suburban publishing. They are also continuing to update his record. At the same time, in China, Starbucks has “established itself as a clear market leader,” with many of the same civilian devices, he writes.
All of this makes it “difficult to pinpoint factors that may be disrupting the growth path of one-year annual single-store sales beyond fiscal 2021,” he concludes.
Write to Teresa Rivas at [email protected]