Starbucks' Ambitious Plans Trigger 9% Price Target Hike By This Analyst

Author: Shivani Kumaresan | September 15, 2022 02:58pm

• Morgan Stanley analyst John Glass reiterated an Equal-Weight rating on the shares of Starbucks Corp (NASDAQ:SBUX) and raised the price target to $96 from $88.
• The analyst said the company's Investor Day outlined ambitious but credible plans to revamp U.S. stores to accelerate sales growth.
• The financial targets strike the analyst as achievable but ambitious and set a high bar that some may view as creating an overhang.
• Also Read: 4 Starbucks Analysts React To Investor Day: 'Attractive Risk-Reward And Valuation'
• The analyst anticipated acceleration in U.S. unit growth as the company seeks to meet demand and, importantly, expand its range of store formats to adapt to today's channel mix- these include drive-thru primary stores, delivery-only stores, and pick-up stores.
• Same-store sales goal of the company seems possible but with seemingly little wiggle room for either execution or macro issues.
• The analyst sees the company's initiative to invest in stores and operations as a key unlock for sales and labor productivity.
• Unionization was addressed only briefly and remains a challenge, though not one that is worsening.
• In the U.S., focusing on premium beverage innovation, customization, digital enhancements, and operational efficiencies should help the top line, though targets allow little room for error.
• Price Action: SBUX shares are trading lower by 0.37% at $92.36 on the last check Thursday.
• Photo Via Wikimedia Commons

Posted In: SBUX