Starbucks Corp. is scheduled to announce first-quarter earnings after the closing bell Thursday.
The coffee purveyor’s
digital platform, including its loyalty program and mobile order and pay functionalities, has been a standout for the restaurant and retail space. But analysts say that prominence has faded.
“While beverage and food platforms are important sales drivers, the most important engine remains Starbucks’s digital platform, which has become less impactful over the last year,” wrote RBC Capital Markets analysts.
Mobile order and pay continues to give the company a boost, but analysts have noticed a slowdown in the number of new, active users.
RBC suggests two chances for the company to breathe renewed life into its digital efforts: the launch of a Starbucks-branded Visa card with JPMorgan Chase & Co.
and an app with easy sign-up.
“We believe having a larger group of consumers with this entry-level relationship could theoretically enable digital marketing to a larger base of consumers,” said RBC.
RBC rates Starbucks shares outperform with a $66 price target, or 8% above its current trading level.
Here’s what to expect:
Earnings: Starbucks is expected to report earnings of 57 cents per share, according to FactSet analysts, up from 52 cents last year and 55 cents last quarter.
Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects per-share earnings of 58 cents.
Starbucks has missed EPS estimates twice in the last 10 quarters, according to FactSet.
Revenue: FactSet analysts expect revenue of $6.19 billion, up from $5.73 billion last year and $5.70 billion last quarter. Estimize expects revenue of $6.14 billion.
FactSet expects same-store sales growth of 3.1%. Same-store sales have missed the last seven quarters.
Sales results have missed estimates seven of the last eight quarters.
Share price: Starbucks shares are up nearly 14% for the last three months, and up nearly 7% for the last 12 months.
The S&P 500 index
is up 25.4% for the past year.
Analysts polled by FactSet have an average overweight rating on Starbucks shares with a $64.75 price target.
-UBS analysts led by Dennis Geiger expect same-store sales at the low end or below the 3%-to-5% range of estimates. But analysts are bullish about improvement with opportunities across technology, loyalty, food and beverages.
UBS rates Starbucks shares buy with a $64 price target.
-Starbucks seems to be focused on giving afternoons a jolt, with Bernstein highlighting the “especially high” number of promotions focused on that part of the day. About 16% of promotional emails were for visits to a Starbucks after 11 a.m., 2 p.m. and 4 p.m. And the volume of social media posts from 2 p.m. to 5 p.m. was higher quarter-over-quarter and year-over-year.
Bernstein rates Starbucks stock outperform with a $67 price target.
-RBC analysts say they’re looking forward to commentary about how tax reform will help EPS growth.
“We estimate a 13 percentage point theoretical boost to EPS and free cash flow from tax reform, but we would not be surprised to see the company make strategic investments in its people as Darden Restaurants recently did,” analysts said.
is the parent company for Olive Garden and LongHorn Steakhouse.