Starbucks (SBUX) Earnings Preview - Credit Suisse

Credit Suisse analyst Lauren Silberman reiterated the $114.00 price target on Starbucks (NASDAQ: SBUX) while maintaining a Outperform rating ahead of earnings on 1/26 AMC. Expectations for F1Q US SSS are a decline of 5-6%, with October -3%, November -4% and December implied at down ~7-10%. The deceleration is caused by a combination of increased restrictions and tougher compares during the holiday season. SBUX expects the US business to fully recover exiting F2Q (March quarter end). F2Q US SSS compares get sequentially tougher from F1Q20’s 6%, with January 2020 SSS of 7% and February 2020 SSS of 9%, before compares ease starting in March (-19%).

The analyst stated "We continue to like SBUX on both near-term & long-term fundamentals. Near-term, SBUX should benefit from reopening & increased commuter traffic, a reduction in industry supply and easy compares (starting in March). Long-term, we remain positive SBUX can return to outperformance, noting strong resilience amidst a challenging breakfast backdrop and considering SBUX had ~55% of stores closed at peak in April, with beverage innovation and a powerful digital ecosystem to drive the most meaningful contribution".

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