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.

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By Mark Kalinowski Published on June 3, 2019 at 12:00 AM

With this report, we upgrade the shares of Denny’s (DENN) to Buy (from Neutral). Our ratings change is due primarily to improving same-store sales trends in the familydining sector, of which we believe Denny’s has been a beneficiary during Q2. As a result, we increase our Q2E same-store sales forecast for U.S. systemwide Denny’s by +100 basis points, to +2.8%, placing us as the new “high-on-the-sell-side” forecast according to Consensus Metrix data. We are now also 70 basis points above sellside consensus (although we expect consensus to move up a bit once our raised estimate becomes reflected in consensus).

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By Mark Kalinowski Published on January 23, 2019 at 12:00 AM

Based on our data-driven checks, we upgrade the shares of Dunkin’ Brands Group (DNKN) from Neutral to Buy. Our checks regarding the fourth quarter lead us to raise our Q4E same-store sales forecast for the core Dunkin’ U.S. business by 60 basis points, to +2.1%, which according to Consensus Metrix data becomes the new sellside high. Sell-side consensus is at +1.4% as of this writing.

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