Ahead of the Bell: Starbucks

Analysts back "Buy" ratings for Starbucks pointing to continued US sales growth

Associated Press

NEW YORK (AP) -- A pair of analysts backed their "Buy" ratings for Starbucks Corp. after the world's largest coffee chain posted a better-than-expected quarterly profit, helped by a jump in U.S. sales.

Despite a still-sluggish economy and weak consumer spending, the company posted a 7 percent increase in fiscal second-quarter sales at U.S. stores open at least 13 months. It got a boost from new drinks and food, such as its sandwiches and pre-packaged lunch boxes.

Based on its first-half results, Starbucks increased its outlook for 2013. But total sales came in shy of Wall Street expectations, and its shares fell in premarket trading Friday.

Jefferies analyst Andy Barish, who backed his $66 price target in addition to his "Buy" rating, said investors should look at any drop in the stock's share price as a chance to pick up shares at a discount.

Barish added that the company's continued innovation of its food and beverage products continues to resonate with its customers.

"Management was enthusiastic about trends heading into the fiscal third quarter, and we think Starbucks is executing on the right mix of drivers to sustain growth," Barish wrote in a note to investors.

Janney Capital Markets analyst Mark Kalinowski, who stuck with his $68 price target, said his "Buy" rating is driven by expectations of continued U.S. sales growth, potentially lower year-over-year coffee costs through fiscal 2017 and possible gains from global sales of single-cup home-brewed coffee.

Starbucks shares fell $1.30, or 2 percent, to $59.20 in premarket trading Friday.

Rates

View Comments (1)