Starbucks (SBUX) For Lunch? Consumers Increasingly Say 'Yes'

April 4, 2013 10:04 AM EDT
Get Alerts SBUX Hot Sheet
Price: $57.66 --0%

Rating Summary:
    28 Buy, 8 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 15 | Down: 11 | New: 9
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This morning Goldman Sachs maintained a Buy rating on Starbucks Corporation (Nasdaq: SBUX) with a price target of $70. For the first time, Starbucks moved into the top spot in the bank's quarterly brand survey.

"The largest contribution comes from an improvement in value perception, something which may be driven by SBUX's strategic decision to hold the line on pricing while coffee prices spiked in 2010/2011. Rather, it absorbed $0.40-$.50 of inflation into its P&L while many others took pricing to preserve profitability," said analyst Michael Kelter.

"The other main driver of SBUX's improved brand score was 'buzz factor,' consumers' willingness to recommend the brand to friends and family members. We see this composition of brand score improvement as exceptionally strong."

Kelter also pointed out Starbucks progress in lunch, which it plans to grow with its La Boulange food launch over the next year.

"25-30% of respondents indicate having visited a Starbucks for a lunch meal occasion over the past six months, versus 20-25% previously, a dynamic that is similar at Dunkin' Brands (Nasdaq: DNKN) which is also attempting to grow its food business. We see the receptivity of food at SBUX as bullish for the La Boulange launch, which we believe may be a meaningful SSS driver in the coming year," concluded Kelter.

For an analyst ratings summary and ratings history on Starbucks (Nasdaq: SBUX) click here. For more ratings news on Starbucks click here.

Shares of Starbucks closed at $57.70 yesterday.

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