Starbucks' Thursday Q4 Print Shrouded With Uncertainties, Revenue Concerns

Starbucks Corporation SBUX is set to report its fourth-quarter results on November 3, and Deutsche Bank expects an in-line EPS for the company, shares of which have been hit recently due uncertainty over the top line.

Investors are worried over the recent decline in quarterly comp growth to 4 percent versus its standard 5 percent or more for the last six-plus years.

Deutsche Bank expects EPS of $0.55, in line with Consensus Metrix and the high-end of management’s guidance. The brokerage projects a blended same-store sales growth of 4.5 percent, but since the company does not report decimals, it believes the overall comp “just as easily be +4 percent or +5 percent.”

Starbucks has been guiding about 15-20 percent annual EPS growth target, but analyst Brett Levy expects the company to target the middle of this range for FY17 “given the top-line challenges across the landscape and company-specific investments in its partners and technology.”

“Our FY17 forecast assumes ~+13 percent/~+17 percent EPS growth on a 53/52-week comparison and results in EPS of $2.14 (~2c below the Street’s current model),” Levy wrote in a note.

Levy maintains his Hold rating on the stock, but cut the price target to $59 from $64, citing his cautious approach on the shares.

Late September, Wedbush’s Nick Setyan said although U.S. comp growth in the fourth quarter is tracking slightly below expectations, the company is likely to achieve mid- to high-teens annual EPS growth.

Further, RBC’s David Palmer expects Starbucks to deliver 5 percent growth in SSS for the fourth quarter based on its consumer panel analysis until September that implied 4–6 percent uptick.

At last check, Starbucks was up 0.8 percent at $52.92.