Starbucks (SBUX) Remains Top Pick - Piper Jaffray

Piper Jaffray analyst, Nicole Miller Regan, reiterated her Overweight rating and $72 PT as Starbucks (NASDAQ: SBUX) reported fiscal 2Q16 results driven by a global comp of +6.0% (2.0% transaction growth). Her investment thesis is based on proven global brand equity and an accelerating asset-light growth model, which generate strong cash flow used to reinvest into the business and for capital allocation. Starbucks remains her top investment recommendation for 2016.

For the fiscal 2Q16 period, total revenues increased ~9.4% to $5.0 billion, relatively in-line with consensus expectations according to the analyst. Operating earnings increased ~18.4% to $0.39 per share, in-line with consensus expectations. Same-store sales in the Americas were +7.0% (5.0% ticket/3.0% traffic), +1.0% in EMEA (1.0% ticket/flat traffic), and 3.0% in CAP (2.0% ticket/2.0% traffic).

The firm's out-year projections through the FY19E period continue to suggest a near doubling of earnings off of FY15's EPS base of $1.58). Continued execution is the primary catalyst and each 100 bps in same-store sales is worth ~$0.06 in EPS and each 1x in EBITDA multiple equates to ~$4/share.

No change to Overweight rating and $72 price target based on 18x FY17E EBITDA.

For an analyst ratings summary and ratings history on Starbucks click here. For more ratings news on Starbucks click here.

Shares of Starbucks closed at $60.64 yesterday.

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