Amid Mixed Reaction To Q4, Starbucks Remains A Best-In-Class Growth Story

Goldman Sachs maintains its Buy rating on Starbucks Corporation (NASDAQ: SBUX) after the company reported solid results amid the ongoing restaurant industry slump.

However, global same store sales of 4 percent missed consensus view of 4.8 percent. The world's largest coffee chain’s same-store sales in the U.S.-led Americas region rose 5 percent for the fourth quarter, in line with consensus. In the same quarter last year, both global and U.S. comps grew 8 percent.

For the first quarter, Starbucks expects EPS of $0.51–$0.52 (consensus: $0.55). For FY17, the company sees EPS of $2.12–$2.14 versus consensus expectations of $2.16.

“We think F4Q results and guidance data points continue to confirm SBUX as a best-in-class growth story, including: EPS guidance within the L/T range despite growing partner investments, 6 percent comps in China, and growing net unit additions with only positive commentary on unit economics,” analyst Karen Holthouse wrote in a note. 

The analyst pointed out that the company continues to see stronger comps at stores driving capacity, and believes the digital pipeline is not exhausted.

Though acknowledged concerns on back-half weighted FY 2017 comp guidance, Holthouse said “a comp that “rounded down” to a 4 percent and an accelerating 2-year trend should reassure investors that no ongoing underlying deceleration is taking place.”

Also, Holthouse believes there is no need to worry about a shift in focus to Reserve from the “core” offering, as similar concerns on food/tea were proven as unnecessary concerns.

That said, the analyst cut her price target by $3 to $66, while the stock was up 2.62 percent to $53.12 at last check.