Starbucks Climbs After Forecast - What Wall Street Is Saying

Starbucks affirmed its guidance for fiscal 2021. Here's a sampling of Wall Street's commentary on the coffee-bar colossus.
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Shares of Starbucks  (SBUX) - Get Report jumped on Thursday after the coffee-bar giant raised long-term forecasts and affirmed its guidance for fiscal 2021.

In a statement summarizing its investor-day presentations, the company said that for fiscal 2023 and 2024, it updated its annual non-GAAP earnings-per-share growth rate to a range of 10% to 12% from at least 10%. 

For fiscal 2021, Starbucks affirmed its GAAP earnings range of $2.34 to $2.54 a share and non-GAAP range of $2.70 to $2.90.

Here's what Wall Street is saying. 

Morgan Stanley (Equal-Weight Rating Unchanged, PT Raised to $106 From $98)

While in itself not surprising as we had viewed 10%+ as too low for the business, it was supported by a slightly higher long-term top-line growth target (now 8% to 10% vs 7% to 9% prior), underpinned by higher comparables guidance (now 4% to 5% vs. 3% to 4% prior including a 4% to 5% view in the U.S. vs 3% to 4% prior and a 2% to 4% China comparables expectation vs. prior 1% to 3%, which seemed too low to us), partially offset by slightly lower global unit growth of 6% (vs. 6% to 7% prior), largely in deference to the growing size of the store base, which is now about 33,000. One could argue that substituting higher comp growth for lower unit growth may dent the quality of the revenue guidance since there is inherently less visibility on comp growth, especially three years out. [But] taking the guidance in totality (top line, a new margin target and resulting EPS growth), this was a positive, in our view.

- John Glass

Barclays (Overweight Rating Unchanged, PT Raised to $117 From $112)

[Starbucks is] a premier, large-cap, high-growth, global consumer company, with a dominant U.S. retail and consumer product platform, significant international growth led by China, and a best-in-class digital platform. We expect all segments will ultimately exceed prior peaks post-covid. For long-term investors, few other names offer proven, industry-leading growth at scale, with scarcity value to provide valuation support. SBUX offers an attractive combination of outsized global fundamental (i.e., comp and unit) growth within both retail and consumer products. The tempering of long-term guidance coupled with the recent fundamental re-acceleration, along with an acknowledged transition towards maturity leaves us bullishly inclined. 

- Jeffrey Bernstein