Starbucks (SBUX) Remains CL-Buy at Goldman Sachs

October 31, 2013 10:13 AM EDT
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Price: $57.85 --0%

Rating Summary:
    27 Buy, 9 Hold, 1 Sell

Rating Trend: = Flat

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    Up: 0 | Down: 0 | New: 0
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Goldman Sachs maintained a Buy rating on Starbucks (NASDAQ: SBUX) with a price target of $92.00. 2014/2015/2016 EPS estimates were lowered to $2.73/$3.35/$3.92 to reflect a higher tax rate. Analyst Michael Kelter made note of robust same store sales growth, international growth, and margin expansion.

"We expect roughly 20% EPS growth for each of the next several years. As such, if SBUX simply maintains its current multiple, it will reach $100bn in market cap (from $60bn today) in roughly three years," said Kelter. "US SSS growth of 8% is best in class and speaks to the robust health of the business. We believe this momentum, combined with the roll out of La Boulange, will help sustain comp growth going forward. Over time, we believe SBUX's US AUV may move from $1.2mn towards $2.0mn."

"SBUX may be able to grow from 20,000 units today to roughly 30,000 by 2018-2019, with room for many thousands more . . .We see visibility towards 400-500bp of margin expansion over the next three years driven by coffee deflation, fixed cost leverage and mix shift towards higher-margin businesses," he added.

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 $80.83 yesterday.

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