As world economies roar back to life and people return to work, the demand for coffee is expected to follow. The Starbucks Corp. (SBUX) is well poised to continue capturing this market, as it is emerging from the COVID-19 pandemic well ahead of its competitors in regards to cash flow and a loyal customer base. (See SBUX stock chart on TipRanks)
Ivan Feinseth of Tigress Financial Partners published a report on the matter, optimistically stating that he expects a “massive uptick in growth,” driven by reemerging post-pandemic demand and strong business trends. Factors he highlighted included Starbucks' innovative digital investments, impressive penetration into the Chinese market, and a successful new loyalty rewards program.
Feinseth reiterated a Buy rating on the stock, and assigned a price target of $130, suggesting a possible upside of 18.51%.
The five-star analyst wrote that Starbucks has recently made updates to its customer experience by including app and kiosk-based ordering platforms to its stores. In the background, the company has streamlined inventory and supply chain processes with machine learning and predictive intelligence.
Feinseth was quick to note that Starbucks has maintained consistent dividend growth since it started paying dividends, in 2010. He expects the company to make share repurchases in the future. In turn, that would push the stock price upward.
Additionally, Starbucks has successfully penetrated the Chinese market for coffee, aided by a nascent middle class and millennial-based demand. This was a particularly impressive achievement, as China’s culture had and does revolve around tea. At the moment, Starbucks has 1,000 stores in 15 different cities across the world’s most-populous country.
In the U.S., encouraging growth has been identified as of late. Feinseth wrote that “Q2 same-store sales in the U.S. increased 9%, highlighting a full post-pandemic sales recovery.” He expects more store openings and further investments in technology for its customers. One such improvement is the Stars for Everyone loyalty rewards program, which has swelled membership to record numbers and expanded the company’s extremely devoted customer base.
On TipRanks, SBUX has an analyst rating consensus of Moderate Buy, based on 15 Buy and 8 Hold ratings. The average analyst Starbucks price target is $125.38, reflecting a potential 12-month upside of 14.29% from Friday’s closing share price of $109.70.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.