Oppenheimer has raised its price target on Starbucks Corporation (NASDAQ: SBUX) stock from grande to venti.
Brian Bittner maintained an Outperform on Starbucks and raised the price target from $82 to $95.
Although Starbucks 37% year-to-date gain has created a more difficult setup heading into the company’s third-quarter report, expected July 25, Bittner said his refreshed analysis forces him to increase earnings estimates, raise the price target and reiterate an Outperform rating.
“Our work highlights a unique opportunity for the Street’s earnings outlook to improve on better-than-expected path for margins. Simultaneously, we identify healthy SSS drivers that could sustain strong trends against subdued consensus forecasts over the next several quarters,” the analyst said in a Thursday note. (See his track record here.)
Oppenheimer is modeling a slight earnings beat ahead of the third-quarter print and is expecting same-store sales growth to come in ahead of the consensus estimate at positive 5%.
Recent operating momentum is now paired with a Nitro beverage roll-out, elevating digital accretion and delivery expansion, Bittner said.
"Since December, digital relationships are +50%, presenting a massive loyalty conversion opportunity where spend/frequency is robust."
Loyalty members now make up 41% of sales for Starbucks, according to Oppenheimer.
Concerns of competition in China have been a dominant theme around the Starbucks investment thesis.
“While China competition continues to worry investors, we believe industry growth paired with fresh internal drivers will drive satisfying growth," Bittner said.
Starbucks shares were up 0.11% at $88.48 at the time of publication Thursday.
Starbucks Shares Perk Up After Q1 Earnings Beat
Analysts Bullish On Starbucks Despite Fast-Moving Chinese Competition
Latest Ratings for SBUX
|Jun 2019||Initiates Coverage On||Outperform|
|Jun 2019||Initiates Coverage On||In-Line|
View More Analyst Ratings for SBUX
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