UPDATE: Guggenheim Starts Starbucks (SBUX) at Neutral
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Guggenheim analyst Gregory Francfort initiates coverage on Starbucks (NASDAQ: SBUX) with a Neutral rating and a price target of $125.00.
The analyst comments "Starbucks is the largest limited-service coffee company in the world with nearly 33k units. SBUX has focused its company operated footprint on the U.S. and China (46%/15% of units but roughly 60-65%/mid-teens portions of non-CPG profitability) while jettisoning other international markets to licensees and streamlining costs. The company has been one of the highest quality growth businesses in consumer given segment tailwinds (an expanding coffee segment), one of the most impressive technology platforms in the industry, and a company operated model that allows for greater control over store level operations and maintenance capex reinvestments. Starbucks has also done a good job over the past 5-10 years of shifting its strip-mall real estate exposure toward drive-thrus through relocations. SBUX has generally run a conservative balance sheet over time (<3x lease adjusted leverage), supporting a multiple premium for stability while at the same time delivering on solid top-line momentum."
Shares of Starbucks closed at $125.97 yesterday.
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