Starbucks Analysts Stick To Sidelines After Q3 Print, Break Down COVID-19 Impact On Coffee Chain

Starbucks Analysts Stick To Sidelines After Q3 Print, Break Down COVID-19 Impact On Coffee Chain

Photo courtesy of Starbucks. 

Starbucks Corporation's SBUX third-quarter report quantified the impact of the COVID-19 pandemic on the coffee chain.

Starbucks said Tuesday that its fiscal third-quarter revenue was down 38% year-over-year to $4.2 billion, and the company posted a net loss of $678.4 million. The Street's reaction to the print was mostly consistent, with multiple analysts recommending that investors stick to the sidelines.

The Starbucks Analysts

BofA Securities analyst Gregory Francfort maintains a Neutral rating on Starbucks with a price target lifted from $80 to $82.

KeyBanc Capital Markets analyst Eric Gonzalez maintains a Sector Weight rating. 

Stifel analyst Chris O'Cull maintains a Hold rating on Starbucks with a price target lifted from $75 to $78.

Morgan Stanley analyst John Glass maintains an Equal-weight rating with a price target lifted from $76 to $79.

Wedbush analyst Nick Setyan maintains a Neutral rating with a price target lifted from $75 to $81.

BofA Recaps Starbucks Q3 

Starbucks reported EPS of negative 46 cents per share in its June-ending quarter, and this was better than management's mid-June guidance of down 55 cents to down 70 cents, Francfort wrote in a note.

The revenue flow-through to profits improved from the prior quarter to 65%, but the figure is worse than Starbucks' usual 50% range, the analyst said. 

Starbucks said that comps were positive 2% at the 3,100 U.S. stores that were open for the duration of the quarter, although comps were likely weighted to the drive-thru, he said.

Digital usage grew in the quarter, as mobile ordering accounted for 22% of the mix, up from 18% in the prior quarter, according to BofA. 

KeyBanc Sees Improving US Trends At Starbucks 

Starbucks' report signaled an improving environment in the U.S. and Americas, Gonzalez said in a note.

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