The investment firm also raised its price target on the stock to $120 from $102, indicating 9% potential upside from the stock's Monday closing price.
"We view SBUX as a reopening beneficiary with meaningful potential upside to fiscal 2021-fiscal 2022 consensus, partly driven by comp contributions from sales transfer due to the U.S. asset base transformation, accelerating digital momentum, easing competitive dynamics in China, and steeper margin recovery," analyst Andrew Strelzik wrote.
The firm sees faster digital penetration in the U.S. and China. Loyalty membership in those two countries in the first quarter grew at its fastest rate in almost two years.
Starbucks is also well-positioned to benefit from increasing consumer mobility as lockdowns begin easing in the U.S., which should provide "outsized benefits" to the company's breakfast operations in urban areas.
BMO estimates that 30% of Starbucks's U.S. stores are located in the top 100 populated U.S. urban areas.
Starbucks is increasingly attractive thanks to its uninspiring stock performance over the past several months, according to BMO.
"SBUX shares have significantly underperformed the fast casual and casual dining stocks in our coverage over the last one- to three- (since vaccine news) and 12-month periods, outperforming only the out-of-favor fast food group over these time frames," Strelzik said.
Starbucks shares at last check were off 0.5% at $101.26. They've also traded on Tuesday up as much as 1.5%.