A Strengthening Model is Brewing
- November 6, 2019
Maintaining Outperform Rating on Starbucks
Momentum is picking up for Starbucks, highlighted by accelerating 2-year traffic trends in the U.S. (and China). This appears the result of digital/loyalty tailwinds, impactful new products, and improved operations.
In connection with Q4 (Sept.) results, Starbucks management initiated 2020 earnings per share guidance at a better range than we had expected, albeit a few pennies below the consensus highlighted in Oppenheimer Analyst's preview. Built into guidance are conservative same-store sales (SSS) assumptions at 3-4%. This is smartly consistent with the long-term outlook, but below where Oppenheimer Analysts believe the company is currently trending, which enhances the setup and our analysts reiterate outperform rating.
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