Barclays Calls Starbucks' Quarter 'Stunning'

In a report published Friday, Barclays analyst Jeffrey Bernstein commented on Starbucks Corporation (NASDAQ: SBUX)'s second quarter results, which were "stunning," led by upside to comps in the core Americas and U.S.

Bernstein noted that Starbucks' second quarter Americas comp of 7 percent was above his expectations and consensus estimates of 5 percent. The analyst added that comp growth was distributed across all dayparts, geographies and platforms (food and beverage), while demonstrating strong growth during peak times, which implies additional room for capacity.

Food contributed 2 percent to the comps (in-line with recent trends), while new premium beverage products drove average check growth.

Looking forward to fiscal 2016, Bernstein sees mobile order and pay being a "key initiative" to support accelerated comp growth. As such, the company can return to a "beat and raise" scenario in years past.

Related Link: Starbucks Shares Rise After Q2 Results

"Looking ahead, Starbucks remains an industry leader in its efforts on capturing incremental traffic through digital technology, mobile order and pay, loyalty programs, gift cards, and innovative food and beverage offering," Berinstein wrote.

"While still in its infancy stage (approximately 650 stores in the Pacific Northwest), mobile order and pay has been extremely well received by both customers and employees, and by all indication shows immense potential for driving incremental transaction growth across the board."

Bottom line, Starbucks demonstrated once again that it is an industry-leading U.S. retail coffee platform while facing "significant" international growth opportunities led by China. At the same time, Starbucks plans to develop its consumer packaged goods line to "rival the global platform."

However, despite a bullish outlook, the analyst maintained a Neutral rating on shares with a price target raised to $50 (approximately 26x calendar 2016 earnings per share of $1.99) from a previous $45 (approximately 25x a prior calendar 2016 earnings per share estimate of $1.90).