By Senad Karaahmetovic
Shares of Starbucks (NASDAQ:SBUX) are trading more than 3% higher in pre-open Friday trading after the company delivered better-than-expected Q3 results.
Starbucks posted an EPS of $0.81 on revenue of $8.4 billion to top the consensus that called for an EPS of $0.73 on sales of $8.33 billion. On a 13-week basis, revenue rose 3%. Starbucks said its global comparable store sales were up 7%, driven by the strong performance in North America and U.S. sales. Comparable sales in China fell 16%.
The average ticket price was up 8%, again fueled by North America (+10), which offset a drop of 1% in the International average ticket price.
“We saw accelerating demand for Starbucks coffee around the world in Q4 and throughout the year. And our Q4 results demonstrate early evidence of the success of our U.S. Reinvention investments,” said Howard Schultz, interim chief executive officer of Starbucks.
During the earnings call, Starbucks presented guidance that came in line with the recent Investor Day commentary. The company expects steady U.S. growth, coupled with a recovery in China.
Citi analysts raised the price target to $93 per share from the prior $90 after a “solid” quarter. Still, they remain Neutral-rated and cautious on the setup.
“Shares may see a pop on a US headline beat/FY23 EPS estimates coming up, but we see little reason for a meaningful, sustained leg-up without color on how these initiatives build to LT guidance,” they wrote in a client note.
Piper Sandler analysts also reaffirmed the Natural rating on SBUX stock.
“From a stock perspective, it's not unit growth or tech investments alone that are the unlock to upside, rather balancing the transactional and relational nature of the brand equity,” the analysts said.