Starbucks analysts remain on the sidelines after Q3 printing, analyze COVID-19 impact on coffee chain

Starbucks said Tuesday that its fiscal third-quarter revenue decreased 38% yoy to $ 4.2 billion, and the company posted a net loss of $ 678.4 million. Street’s reaction to the print was largely consistent, with multiple analysts recommending that investors remain on the sidelines.

Starbucks Analysts

BofA Securities analyst Gregory Frankfurt maintains a Neutral rating at Starbucks with a high target price of $ 80 to $ 82.

KeyBanc Capital Markets analyst Eric González maintains an industry weighting rating.

Stifel analyst Chris O’Cull maintains a Hold rating at Starbucks with a high target price of $ 75 to $ 78.

Morgan Stanley analyst John Glass maintains an equal weight rating with a high target price of $ 76 to $ 79.

Wedbush analyst Nick Setyan maintains a Neutral rating with a high target price of $ 75 to $ 81.

BofA recaps Starbucks Q3

Starbucks reported EPS of 46 negative cents per share in the quarter ending in June, and this was better than the administration’s mid-June guidance to drop 55 cents to 70 cents, Frankfurt wrote in a note.

The revenue to earnings stream improved from the previous quarter to 65%, but the figure is worse than Starbucks’ usual 50% range, the analyst said.

Starbucks said rewards were positive by 2% in the 3,100 US stores that were open during the quarter, although the rewards were likely weighted in the drive-thru, he said.

Digital use grew in the quarter, as mobile orders accounted for 22% of the mix, up from 18% in the previous quarter, according to BofA.

KeyBanc sees how to improve American trends at Starbucks

The Starbucks report noted an improvement in the environment in the United States and America, González said in a note.

Sales in the same stores in America improved from 43% in May to 19% in June. The improvement trend is expected to continue in the fiscal fourth quarter to drop 12% to 17%, the analyst said.

The company is seeing encouraging trends in its Rewards (MSR) program, as total app downloads increased 9% to 3 million, and MSR members accounted for 46% of sales, he said, four points more than the last year.

Future-oriented skills and entrepreneurial mindset should place it well above LT. “” data-reactid = “40”> “We believe in scale, the digital platform, Starbucks innovation
Future-oriented entrepreneurial skills and mindset should position it above LT. “

See more earnings on SBUX

Stifel says Starbucks momentum in China is on hiatus

Starbucks sales at the same restaurant in China improved during the quarter, from 21% in May to 16% in June, O’Cull said in a note.

However, a resurgence of COVID-19 cases in Beijing resulted in a decrease in traffic trends in the last two weeks of the quarter, the analyst said.

The sales guidance range for the same Starbucks restaurant for the full year was reduced from a range of 10% to 20% to a range of 15% to 20%, the analyst said.

The figures do not include a VAT exemption, so a comparable range is down 17% to 22%, he said.

The company expects sales at the same restaurant to recover substantially by the end of the fiscal first quarter, O’Cull said.

The boost is likely to come from rewards program enhancements and a mobile checkout feature on multiple platforms through a Starbucks-Alibaba partnership that will reach nearly a billion users, the analyst said.

Morgan Stanley on Starbucks exhibition COVID-19

Starbucks is one of the companies most affected by COVID-19, especially within limited-service restaurants, Glass said in a note.

In particular, the morning routine for most people has changed, and this unfavorable change is likely to continue for the foreseeable future, the analyst said.

According to Morgan Stanley, flat builds are not expected in the US until March 2021, when the industry begins to overcome the early days of the pandemic.

Wedbush in a Starbucks long-term tailwind

Starbucks deserves credit for a strategy to further streamline its national stores, especially in dense urban markets, Setyan said in a note.

The company will reposition many stores to move to a pick-up-only format, the analyst said.

The story continues