Starbucks to Open 500 New Stores

Earlier this week, Starbucks shares garnered a wave of broker action following the coffee chain giant's better-than-expected quarterly report.

>>Starbucks Brews Higher Expectations

Equities research analysts from UBS, Barclays Capital , RBC Capital Markets and McAdams Wright Ragen raised their price target on Starbucks shares.

UBS reiterated a buy rating on the stock, and raised its price target by $2 to $33. Barclays maintained an equal weight rating and upped its price target by $4 to $30. RBC reiterated a sector perform rating on Starbucks shares, and set a new price target of $30, up $3 from its prior target. McAdams Wright Ragen reiterated a buy rating and raised its price target by $5 to $36.

Starbucks posted better-than-expected top- and bottom-line results for the third quarter last week. Quarterly profits jumped 8.9% to $278.9 million, or 37 cents per share. Revenue grew 17.2% to $2.8 billion.

>>Starbucks Percolates on Earnings Beat

Global comparable same-store sales, or sales at stores open at least one year, grew 8%. Global traffic increased 5%. Operating margins pushed sharply higher to 17.3% in the U.S. and 13.8% internationally in the quarter.

Starbucks reiterated its fiscal 2011 targets introduced over the summer for net new store growth of 500 -- including 100 in the U.S. and 400 internationally, the majority of which are expected to be licensed stores. It also targeted mid-to-high single-digit revenue growth based on a 52-week comparable year, driven by low-to-mid single-digit comparable store sales growth.

The coffee chain raised its fiscal 2011 EPS guidance to a range of $1.41 to $1.47 per share.

Starbucks maintained its 13-cent dividend, to be paid next on Dec. 3 to shareholders of record on Nov. 18.

S&P restaurant analyst Erik Kolb upgraded his rating on Starbucks shares to hold, from sell, following the earnings beat, noting its better-than-expected earnings and growth in comparable same-store sales, driven by higher traffic and average ticket price.

"[Fiscal 2011] guidance gives us greater confidence in the viability of SBUX's turnaround efforts," he noted. "We now see 500 new store openings and slightly higher operating margins leading to continued EPS growth. However, currency is likely to remain a headwind."

« First ‹ Previous 1 2 3 Next › Last »