Canaccord Genuity Morning Coffee on Starbucks (SBUX): Starbuck-ing The Trend
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Price: $107.08 +2.97%
Rating Summary:
26 Buy, 22 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
26 Buy, 22 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Canaccord Genuity Morning Coffee on Starbucks (Nasdaq: SBUX): Starbuck-ing the trend.
Canaccord analyst said, "Credit Suisse has crunched the numbers for the recent Starbucks-Green Mountain (Nasdaq: GMCR) agreement, and estimates it will add $0.15/0.23 to the coffee giant’s F12/F13 EPS. The broker estimates per K-cup EBIT of $0.34/$0.10 for distribution channels, versus only $0.06 for traditional packaged coffee. Overall, the broker has every reason to believe the agreement is favourable to Starbucks, as it is another extremely high-return and low-risk way to leverage brand equity. The strength of the Starbucks brand adds significant value to Green Mountain’s Keuring platform, which is now the clear winner in the domestic single serve market. Better still, Starbucks is committing virtually no capital and retains some flexibility for other single serve options. As for catalysts, Credit Suisse points out that the dissolution of the Kraft (NYSE: KFT) agreement and a clear plan for the single-cup market (that doesn’t involve an acquisition or a proprietary platform) removes two key overhangs from the stock. The broker believes the focus will now shift to Q2 results, with investors looking for evidence of continued comp momentum, margin progress, and the potential for estimate increases upon greater clarification of ex-Kraft packaged coffee economics. Starbucks reports these results on April 27, but Credit Suisse has increased its target price in advance, to reflect improving long-term growth prospects."
Canaccord analyst said, "Credit Suisse has crunched the numbers for the recent Starbucks-Green Mountain (Nasdaq: GMCR) agreement, and estimates it will add $0.15/0.23 to the coffee giant’s F12/F13 EPS. The broker estimates per K-cup EBIT of $0.34/$0.10 for distribution channels, versus only $0.06 for traditional packaged coffee. Overall, the broker has every reason to believe the agreement is favourable to Starbucks, as it is another extremely high-return and low-risk way to leverage brand equity. The strength of the Starbucks brand adds significant value to Green Mountain’s Keuring platform, which is now the clear winner in the domestic single serve market. Better still, Starbucks is committing virtually no capital and retains some flexibility for other single serve options. As for catalysts, Credit Suisse points out that the dissolution of the Kraft (NYSE: KFT) agreement and a clear plan for the single-cup market (that doesn’t involve an acquisition or a proprietary platform) removes two key overhangs from the stock. The broker believes the focus will now shift to Q2 results, with investors looking for evidence of continued comp momentum, margin progress, and the potential for estimate increases upon greater clarification of ex-Kraft packaged coffee economics. Starbucks reports these results on April 27, but Credit Suisse has increased its target price in advance, to reflect improving long-term growth prospects."
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