Deutsche Bank: Buy Starbucks, 'Maybe The Ticker Should Be $BUX'

In a report published Thursday, Deutsche Bank analyst Karen Short initiated coverage of Starbucks Corporation SBUX with a Buy rating and a price target of $60, citing the company's "continued industry leading sales trend," robust earnings growth and rising ROIC. In the report Deutsche Bank noted, "Starbucks continues to be a transformative restaurant company and instrument of change across the unit level (new product introductions, day-part expansion), employee relations (wages, benefits, culture) and technologically (mobile, loyalty). The result has been impressive SSS gains, increased global reach (~22k units, expanded third-party channel distribution), solid high-teens plus EPS growth in recent years." Starbucks has added more than 5k units globally over the past five years, taking the total worldwide figure past the 22k units mark. The company is looking for new ways to expand its reach. Moreover, the company is constantly expanding its beverage and food offerings, which has resulted in "impressive and consistent SSS results and a doubling of its annual operating profits to over $3bn over the last five years," Short said. "We believe Starbucks is one of the most technologically sophisticated consumer companies and we look for the company to build on and leverage its highly digitally savvy customer base, to improve unit level operations, drive additional loyalty and get closer to its customers (marketing, partnerships)," the Deutsche Bank report mentioned. Short believes that Starbucks has "prudently spent on growth," while also returning "billions of dollars a year to its shareholders" and also boosting its ROIC through most part of the last decade.