Starbucks Analyst Roundup On Q4 Earnings

October 31, 2014

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Starbucks Corporation (NASDAQ: SBUX) reported financial results Thursday with Q4 consolidated net revenue at $4.2 billion, inline with estimates of $4.23 billion.

Guidance disappointed investors along with Starbucks management reporting slowing consumer traffic. The stock dropped amid the news, falling to $75.55, down 2.2 percent Friday.

Analysts weighed in on the earnings report. Below are their comments along with current ratings and price targets.

Barclays – Equal Weight, $81 price target

"SBUX acknowledged feeling the impact of the consumer uncertainty. And they are "not satisfied with 1 percent traffic growth in the America's and are taking immediate steps to grow traffic. We believe their 2014 holiday calendar will stabilize recent trends. But with comps down from peaks, coffee costs close to peaks, and investments large in "mobile commerce, innovation, in the customer experience and the partners", we see limited near-term EPS upside relative to F15 guidance for 16-18 percent growth."

Wells Fargo – Outperform, $89-$91 valuation range

"SBUX has designed its holiday campaign around [the shift of lower consumer traffic] with its ''Starbucks for Life'' contest and 100 proprietary gift card designs to drive gift purchasing which we believe should help to reaccelerate traffic in FQ1. Bottom line – SBUX continues to be ahead of the curve (and its competition) in identifying secular consumer shifts and managing business accordingly. We believe this foresight combined with its robust innovation pipeline, impressive execution and financial discipline positions SBUX for impressive near and long-term results."

Oppenheimer – Outperform, $86 price target

"A strong quarter, but a traffic deceleration is making the stock controversial once again. Perhaps a good thing, given SBUX always is a better performing stock best when doubters of its business model are high-numbered. Management doesn't blame the slowdown on competition or throughput issues and believes its mobile/digital strategy will be a game changer. We are buyers of weakness, particularly as valuation becomes more attractive trading at 20x next year's EPS."

Morgan Stanley – Overweight, no price target

"Americas comp of 5 percent missed our 6 percent estimate as traffic was up 1 percent vs our 2 percent. That is significant insofar as it represents a sequential one and two year slowdown. Throughput and competition not contributing factors, in management’s opinion, though macro and e-commerce driven shifts in shopping patterns isn't completely consistent with improving traffic seen by some others this quarter. We'd also note that SBUX's mall exposure –just 20 percent of US base–is relatively low for restaurants. What is true is that few if any restaurants or retailers of scale have enjoyed SBUX's run of substantial traffic gains in recent years and perhaps its just that."