Starbucks to Hold Virtual Annual Meeting on Virus Fears; Oppenheimer Maintains Outperform

Starbucks will hold its annual shareholder meeting virtually due to coronavirus concerns, while Oppenheimer reiterates its outperform rating on the company.
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Starbucks (SBUX) - Get Report said Wednesday it will host its annual shareholder meeting in virtual format over concerns about the coronavirus, while an Oppenheimer analyst reiterated his outperform rating on the company, saying any near-term 2020 earnings reset will be "temporary and modest."  

Shares of the coffee retailing kingpin were essentially flat at $78.75.

The meeting is scheduled to take place on March 18.

"Due to the emerging public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our partners and shareholders," the company said in a statement, "please note that the location of the Annual Meeting of Shareholders has been changed and will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting physically."

The Seattle-based company joins a long list of corporations that have canceled real world meetings and conferences, including Facebook, Alphabet and Nvidia, as the deadly virus continues to spread.

Analyst Brian Bittner said his updated analysis that takes into account the impact of the coronavirus reflects 12 to 16 cents of potential earnings per share downside in 2020 compared with Wall Street's current $3.00 estimate. His price target on Starbucks is $95.

This incorporates the pandemic's estimated international impact, he said; any major disruption domestically would represent incremental downside.

Bittner said he would reduce his 2020 earnings per share 6% below Wall Street, but he would take advantage of stock's recent 12% pullback as: "1) any near-term 2020 earnings reset to be temporary and modest, and 2) underlying sales/margin themes are powerful and attract us to stock's upside once virus fears fade."

"Our analysis highlights a clear path for predictably strong underlying same-store-sales and margins against management’s 2020 financial outlook (ex recent coronavirus)," he wrote. "(Same store sales) in the US possess momentum with tangible drivers behind cold beverage innovation, accelerating loyalty growth and elevating digital engagement."

Bittner said that he expected China and other areas to fully recover once the virus fears subside, backed by delivery and digital opportunities.