Starbucks "outperform," target price reduced - update

16.11.07 - RBC Capital Markets

NEW YORK, November 16 (newratings.com) - Analysts at RBC Capital Markets maintain their "outperform" rating on Starbucks Corp (SBUX), while reducing their estimates for the company. The target price has been reduced from $37 to $26.

In a research note published this morning, the analysts mention that despite weakening consumer spending and record-high dairy costs, the company has posted FY07 revenue and EPS growth of 22% and 21%, respectively. Starbucks? sales, ROIC and EPS trends decelerated during FY07, the analysts say. The company is, however, expected to face easier comps and margins in the US during FY08, RBC Capital Markets adds. The EPS estimate for 2008 has been reduced from $1.07 to $1.03.