SBUX Updating Our Rating on Starbucks Ahead of 7.25 Earnings Release

By Mark Kalinowski Published on July 18, 2019 at 12:00 AM

Ahead of Starbucks’ (SBUX) fiscal Q3 earnings release scheduled for after the market close on Thursday, July 25th, we upgrade SBUX to Buy (from Neutral). Some of the concerns we had 3-6 months ago have been alleviated to a meaningful degree, including (1) the possibility that a serious run for office by former CEO Howard Schultz could have an adverse effect on the business; Mr. Schultz has put his campaign on hold which significantly alleviates this risk, and (2) concerns about competition in China — public filings by Luckin Coffee (LK; Not Rated) — which had its IPO this past May — give us a greater comfort level that near-term competitive threats in this key growth market can be fought off.

SBUX We’ll Hoist a Venti S’mores Frappuccino to This Improved Outlook

By Mark Kalinowski Published on April 25, 2019 at 12:00 AM

After Thursday’s market close, Starbucks (SBUX; Neutral) reported adjusted fiscal Q2 EPS of $0.60, surpassing our $0.57 forecast and the sell-side consensus (according to Consensus Metrix) of $0.56. The company also raises its target range for full-fiscal 2019 EPS to $2.75-$2.79 (from $2.68-$2.73 previously, an increase of $0.07 at the low end of the range and an increase of $0.06 at the high end of the range). Management attributes the improved outlook as follows: (1) two-thirds to an improved tax-rate outlook, and (2) one-third to a better outlook for Americas’ operating margins.

Luckin Coffee A Look at Unit Economics

By Mark Kalinowski Published on April 22, 2019 at 12:00 AM

Earlier today, Luckin Coffee filed for an IPO, seeking to trade on the Nasdaq with the ticker symbol “LK.” Given the data provided in the filing with the SEC, we take a closer look at Luckin Coffee’s unit economics in this report. Incidentally, that SEC filing is available at:
https://www.sec.gov/Archives/edgar/data/1767582/000104746919002450/ a2238391zf-1.htm