Starbucks Corporation (ticker: SBUX) stock has lagged many of its large-cap restaurant peers in the past year, but the company’s recent struggles may soon be over. Stifel analyst Mark Astrachan has upgraded SBUX stock from “hold” to “buy” and says there’s nothing wrong with Starbucks’ innovation or core business.
Starbucks has fallen short of market expectations for U.S. comparable store sales growth for four consecutive quarters. According to Astrachan, that trend will soon be coming to an end.
“We believe the sequential declines in U.S. comp store sales growth … were largely due to non-recurring factors,” Asrachan says.
In addition, he says investors should expect “improvement in overall and U.S. [comparable store sales] next quarter and for the remainder of [the fiscal year] driven largely by more favorable comparisons and, to a lesser extent, innovation.”
Stifel now projects 5 to 6 percent U.S. comparable sales growth over at least the next four quarters.
Starbucks is in the process of rolling out a number of innovations, including text notifications when orders are ready and personalized recommendations via the Starbucks app. The company also is beefing up its cold brew and tea offerings.
Despite its disappointing sales numbers in the past year, Starbucks’ innovation has allowed the coffee giant to maintain its reputation as a top choice among the coveted teen demographic. The latest Piper Jaffray bi-annual teen survey revealed Starbucks is the second choice behind only Chick-fil-A as the most preferred restaurant destination among teens.
Outside the restaurant segment, Astrachan says Starbucks also has growth potential in its packaged tea and coffee business, as well as its ready-to-drink beverage business.
Astrachan says…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
