RBC Capital Maintains Bullish View on Starbucks (SBUX), Says SSS Could Reaccelerate in F2H17
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RBC Capital analyst David Palmer reiterated his Outperform rating and $64 price target on Starbucks (NASDAQ: SBUX) following slightly better than expected F4Q EPS and SSS trends.
"While difficult comparisons and partner investments could limit near-term SSS and EPS upside, we believe SSS growth could reaccelerate in F2H17 as comparisons ease and the company focuses on acquiring new Rewards users," the analyst said.
Palmer added, "We are maintaining our $64 price target and FY17 EPS estimate of $2.13 (+13% YOY). Our FY17 EPS estimate is within the company's $2.12 to $2.14 guidance range, which falls at the low end of company's 15%-20% LT target growth range (on a 52-week basis). Our 4.5% Americas segment SSS growth (2017e) is unchanged and is consistent with company expectation that trends will be higher in the second half (partly as a result of reaccelerating Rewards membership growth). In addition, our model accounts for a $250 million (vs. $160 million last year) step-up in partner/ technology investments and a slight tailwind from commodities that is likely to be offset by FX. Our $64 price target equates to 26x our FY18 EPS estimate of $2.46 (+16% YOY)."
Shares of Starbucks closed at $51.77 yesterday.
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