Starbucks stock pops after meeting ‘highest level’

Wall Street sipping on Starbucks shares after a better-than-expected quarter sparked optimism about a broader recovery in business next year.

Starbucks stock is up 3% in pre-market trading on Friday Fourth quarter sales, same US department store sales and earnings easily beat analyst expectations. The coffee giant had one of the Top 10 Most visited index pages on Yahoo Finance before the opening bell.

On a call with analysts, executives stuck to optimistic guidance for earnings growth of 15% to 20% from fiscal year 2023 to 2025 and hinted sales in October were strong.

“Fiscal year 23 and long-term goals, although capped high, appear on track with US sales/margin likely to continue, in our opinion,” Jefferies analyst Andy Parrish wrote in a note to clients. “We believe that recent, ongoing and planned investments in business (people, equipment, technology, etc.) will play well in the long-term for a highly capitalized global brand that is able to weather the overall headwinds.”

This is the vibe on Wall Street on SBUX that comes out of the results:

Jeffries: Andy Parrish

• evaluation: buy (duplicate)

• Target price: $100 dollars

Same-store sales outperformed admirably in the US, with many near/long-term drivers. US same-store sales of 11% outperformed the consensus of 8%, with 1% traffic and 10% average Screening, driven alone Medium to high percentage pricing, robust nutritional supplements, digital (MOP 26% of sales), delivery, rewards (28.7 million members, +16% year-over-year, contributed 55% of bid), Cold brew platform continues to increase in mix (increased 100bps quarterly to 76%) and with more customizations/adjustments (now 60% of US-owned store liquor). High 7-9%, US 7-9%, China negative in Q1 given recent COVID outbreak but huge gains remaining from the year on easy laps; F1Q global same-store sales closer to 7%; fiscal year total revenue growth of 10-12% even with higher foreign exchange rates effect.Long-term Yell, we view the ongoing and planned investments in team members (partners), operations and equipment/technology discussed at the September Analyst Venture Day as supportive of strong same-store sales momentum. We raised our estimate for fiscal year 23 to 10% from 9%, and we are keeping our fiscal year 24 estimate at 8%.”

The story continues

Citigroup: John Tower

“It’s hard to argue with business momentum – results confirmed (widely expected) lower double-digit US F4Q rate (widely expected) and improved international trends (including China). However, we can see pendulum sentiment swings in the long run. Close with: (1) higher frequency foot traffic data somewhat contradicts company comments/guidelines that suggested momentum building in October in the US, and (2) guidance requiring rapid improvement to China’s background in fiscal year 23 (after a setback in F1Q.) Meanwhile, the call did little to clarify a key question coming from the last investor day: How will revenue, profits and returns fully accrue to US initiatives once they are fully installed (particularly the Siren remodeling program)? Estimates are coming, but we don’t see A reason to have meaningful and sustainable colorless support on how these initiatives build long-term guidance.”

Brian Suzy It is a comprehensive editor and Announcer at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on LinkedIn.

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