Starbucks stock surges after strong North America sales

Investing.com -- Starbucks (NASDAQ: SBUX) shares jumped 5.84% following second quarter results that showed the strongest North America transaction growth in approximately three years.

The coffee chain delivered results that exceeded expectations despite challenging macroeconomic conditions and rising competitive pressure. The North America same-store sales growth trend has improved by 13 percentage points over the last six quarters, with strong momentum continuing in April, according to Evercore analysts.

The company raised its fiscal 2026 comparable sales guidance to 5%+ from 3%+, while lifting its earnings per share outlook to $2.25-$2.45 from $2.15-$2.40. The guidance increase came as the company's operational, marketing and product initiatives drove the top-line recovery.

Evercore analysts commented: "Top-line recovery clear, flow-through still building. Starbucks' North America SSS growth trend has improved by 13pp over the last six quarters with strong momentum continuing in April. This improvement reflects a combination of operational, marketing and product initiatives. With the top-line recovery ongoing, we anticipate improving incremental margins in FY27 (50%+ in North America vs. -7% in FY26) and FY28 as labor reinvestment is lapped, coffee inflation moderates, and productivity savings ramp ($2B by FY28)."

Evercore raised its price target to $115 from $110 and reiterated its Outperform rating. The firm increased its fiscal 2026 EPS estimate to $2.45 from $2.30, fiscal 2027 to $3.25 from $3.09, and fiscal 2028 to $4.00 from $3.92.

Wolfe Research noted that early reads on the March loyalty program overhaul look encouraging, while the April Energy Refresher launch appears to be tracking well. The firm raised its fiscal 2026, 2027 and 2028 EPS estimates to $2.37, $2.99 and $3.65 respectively.

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