How Starbucks Coffee (SBUX) Plans to Return to 5% Growth - RBC

August 5, 2016 6:32 AM EDT
Get Alerts SBUX Hot Sheet
Price: $53.63 +0.07%

Rating Summary:
    27 Buy, 8 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 14 | Down: 11 | New: 8
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RBC Capital analyst, David Palmer, reiterated his Outperform rating on shares of Starbucks (NASDAQ: SBUX) after hosting meetings with Starbucks management. Conversations fell into three buckets: 1) reasons for a rare quarter of sub-5% Americas SSS growth, and confidence in a return to 5%; 2) FY17 margin/EPS considerations; and 3) long-term growth drivers.

The company cited three factors that contributed to its 4% Americas SSS in F3Q: 1) a slowdown in the My Starbucks Rewards (MSR) adoption rate and mobile usage growth as consumers acclimated to the new app; 2) increased consumer uncertainty; and 3) a mis-execution of the Frappuccino happy hour. Of these issues, the company noted that macro uncertainty is the only factor beyond its control. The analyst believes negative effects from the new Rewards app will continue to fade while other digital marketing can bolster sales. In short, the company sounded confident that with improved execution it would hit its 5% target for F4Q.

No change to the price target of $68.00

For an analyst ratings summary and ratings history on Starbucks click here. For more ratings news on Starbucks click here.

Shares of Starbucks closed at $55.42 yesterday.

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