Channel Checks Indicate Starbucks Saw 4% Comps Growth In U.S. During Q1

Starbucks Corporation SBUX could generate “consistent mid-to-high teens annual EPS growth,” given expectations of Americas comp momentum, accelerating China and Asia Pacific Region unit growth, a successful Europe, the Middle East and Africa turnaround and multiple consumer packaged goods and emerging market opportunities, Wedbush’s Nick Setyan said in a report.

Setyan reiterated an Outperform rating on Starbucks, with a price target of $65. He added that channel checks had indicated ~4 percent U.S. comps in FQ1.

U.S. Comps

“Our recent checks of 5 percent of U.S. co-owned locations imply a FQ1 comp of ~4 percent in U.S., approximately in-line with 4 percent Americas consensus. Mobile order and pay, remodels and drive-thru additions, beverage innovation and seasonal LTOs, and food continue to be cited as drivers, while cannibalization remains the primary reason for a decline in sales,” Setyan wrote.

The analyst expressed optimism regarding sustained momentum in Americas comp growth, citing continued benefit from the company’s differentiated food offerings, attractive beverage limited-time offers, mobile ordering, throughput and loyalty and mobile adoption initiatives.

Starbucks has guided to non-GAAP EPS of $2.12–$2.14 on mid-single-digit comp growth for FY 2017.