UPDATE: Bernstein Starts Starbucks (SBUX) at Market Perform
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Bernstein analyst Danilo Gargiulo initiates coverage on Starbucks (NASDAQ: SBUX) with a Market Perform rating and a price target of $94.00.
The analyst comments "Starbucks: Baby, it's cold outside! (SBUX, Market-Perform, TP $94, +13% potential upside). We're cautious on Starbucks' enduring challenges in US and China that have resulted in reduction in traffic footfall. Together with continued margin pressure and an anachronistic store design, we believe a transformation is needed for this global behemoth and transformations are hard to execute at such scale. However, we can't ignore Starbucks' significant competitive advantages and rich history of innovation. The brand strength, scale, reward program and coffee consumption secular tailwind help Starbucks position itself for long-term growth. We believe our EPS NTM+1 estimate of $3.6 is built into the current price. We believe the current multiple reflects the risks associated with the pending transformation. We rate SBUX as Market-Perform with our 1 year TP as $94."
Shares of Starbucks closed at $84.52 yesterday.
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