Starbucks stock explodes after hitting ‘a high bar’

Wall Street is sipping on Starbucks shares after a better-than-expected quarter sparked optimism about a broader rebound for the company next year.

Starbucks stock gained 3% in premarket trading on Friday as a fourth fiscal quarter sales, U.S. same-store sales and earnings were well ahead of analysts’ forecasts. The coffee giant had one of Top 10 most visited ticker pages on Yahoo Finance before the opening bell.

On a call with analysts, executives remained with an upbeat forecast for earnings growth of 15% to 20% from fiscal year 2023 to 2025 and hinted that October sales were strong.

“Fiscal 23 and long-term goals, while setting the bar high, appear on track with US same-store sales/margin momentum set to continue, in our view,” Andy wrote. Jefferies analyst Barish in a note to clients. “We believe recent, ongoing and planned investments in the industry (staff, equipment, technology, etc.) should play well over the long term for a large-cap global brand that can weather macro headwinds.”

Here’s the mood on Wall Street on SBUX after the results:

Jefferies: Andy Barish

  • Evaluation: Buy (repeated)

  • Price target: $100

“Impressive US same store sales, multiple short/long term drivers in place. US same store sales of 11% beat consensus of 8%, with 1% traffic an average check of 10%, driven by a single mid to high 1-digit percentage price, strong attachment to food, digital (MOP 26% of sales), drive-thru, delivery, rewards (28.7 million members , +16% year-on-year, and a record 55% contribution from the tender), the cold drinks platform continues to increase the mix (up 100 bps quarter-on-quarter). the other 76%) and with more customizations/modifications (now 60% of condominium store beverages in the US) -9%, China negative in 1Q given the recent COVID surge, but gains outsized the rest of the year on easy laps; F1Q Global same-store sales closer to 7 %; 10-12% full year revenue growth even with higher exchange rates Longer term, we are looking at ongoing and planned investments in team members (partners), operations and equipment/technology discussed at the September analysts’ day as supporting strong same-store sales momentum. We are increasing our FY23 estimate to 10% from 9%, and maintaining FY24 8%.”

An employee works in a Starbucks coffee truck at Wuhan International Plaza on October 6, 2022 in Wuhan, Hubei province, China. (Photo by Getty Images)

Citigroup: Jon Tower

“Hard to argue with the trade momentum – the results confirmed a double-digit US F4Q (widely expected) and improving international trends (including China). However, we could see the near-term sentiment pendulum swing with: (1) higher frequency foot traffic data somewhat contradicts company commentary/guidance that suggested building momentum in October in the U.S., and (2) forecast that requires a rapid improvement in the Chinese context in FY23 (after a setback in the first quarter) to clarify a key question from the recent Investor Day: how accretive will US initiatives be to revenue, earnings and returns a fully installed (particularly the Siren refurbishment program) estimates to come, but we see little reason for a significant advance positive and sustained without color on how these initiatives build on long-term directions.”

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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