Analyst encouraged by Starbucks' test of sodas

Janney analyst backs 'Buy' rating for Starbucks, likes test of new soda product in Seattle

Associated Press

NEW YORK (AP) -- A Janney Capital Markets analyst on Tuesday backed his "Buy" rating for Starbucks Corp., citing the company's test of a new soda product in a few locations and expectations for ongoing sales growth.

THE OPINION: Mark Kalinowski pointed to a post on the StarbucksMelody.com blog that the company is testing out "handcrafted" spiced root beer, lemon ale and ginger ale sodas at some of its stores, while also introducing carbonated versions of some of its existing beverages like iced tea.

A Starbucks spokeswoman, Lisa Passe, noted that the test did not necessarily mean a national launch was planned. She said the drinks are being tested in some stores in Seattle, where Starbucks is headquartered.

Kalinowski said it was nevertheless encouraging to see Starbucks try to continue innovating. He expects "solid" trends in U.S. revenue at stores open at least a year, along with potential drops in year-over-year coffee costs through 2017 and an opportunity to sell single-cup coffee overseas.

THE SHARES: Up 85 cents, or 1.5 percent, to close at $58.56.

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