Starbucks (SBUX) Sees K-Cup Sales Accelerate, UBS Notes (GMCR)

UBS analyst Keith Siegner reiterated a Buy rating and $63 price target on Starbucks (NASDAQ: SBUX) noting K-cup sales accelerated while market share reached a new 2015 high-water mark.

Siegner commented, "SBUX single-serve sales increased 41% y/y for the 4-wk period ended 9/5/15 within Nielsen AOC+C-store channels, relative to +35% 12-wk sales growth trends. Composition of SBUX monthly sales included +53% unit growth. SBUX $ share of the ss cup/pod category increased +40 bps from last month to 16.7% and the highest level this year. Beyond K-Cups, SBUX's traditional ground packaged coffee sales increased ~14% y/y, outpacing the category's ~2.5% increase, driven by robust and accelerating ~20% volumes (against +14% over latest 52 weeks) – impressive results considering the momentum within the K-Cup business and highlights ongoing strength of the brand. SBUX's K-Cup and bagged coffee sales acceleration is benefiting from product variety, innovation & execution against heightened competition."

While Starbucks is having success, K-cup category sales deceleration continues with Keurig Green Mountain (NASDAQ: GMCR) losing shares to brands. "Overall U.S. single-serve cup category dollar sales increased ~16% y/y, representing a deceleration vs. prior months (+18% over last 12 & 52 weeks). The recent launches from restaurant brands Dunkin' and McDonald's continued to exhibit solid market share. McCafé brand realized a very modest sequential dollar share gain relative to the prior month, taking K-Cup share to 3.6%. Dunkin' brand continued its solid momentum since launching in measured channels a few months ago, gaining +80 bps to 5.4% share. We expect Dunkin' can continue to realize solid K-Cup category gains, while McCafé can likely see some further gains from here."

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 $56.91 yesterday.

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