Starbucks Gains After JPMorgan Ratings Upgrade, Price Target Boost on ‘Growth at Scale’ Agenda
Starbucks Inc. (SBUX) shares were indicated higher in pre-market trading Thursday after analysts and JPMorgan boosted their rating on the world’s biggest coffee chain, citing confidence in its ‘growth at scale” agenda that could top current sales and margin forecasts.
JPMorgan analyst John Ivankoe lifted his rating on the group to ‘overweight”, with an a $4 improvement to his price target that now sits at $94 a share, following a meeting with senior management that included CEO Kevin Johnson.
Overall, we sensed a high degree of confidence that the “growth at scale” agenda is working in the near and medium term, meeting if not exceeding set sales and margin objectives,” Ivankoe said. “We believe US comps are 5%+ and that China results are at least within 1-3% expectations. We expect much of this sales momentum to continue, and expect our/street numbers to trend up through the year.”
Starbucks shares were marked 1.75% higher in pre-market trading Thursday to indicate an opening bell price of $88.10 each, a move that would extend the stock’s year-to-date gain to around 37%, well ahead of the 25.3% advance for the S&P 500.
Starbucks shares have been largely stagnant over the past six week, however, after it met Street forecasts for its fourth quarter earnings on October 30 and guided for fiscal 2020 revenue growth of between 6% and 8%, implying a topline of around $28.4 billion.