Starbucks’ big growth into Asia will underperform the company’s guidance, according to one Collapse Street firm.
Wedbush Securities lowered its rating to neutral from outperform for Starbucks divisions, predicting the company’s sales growth will come in below presumptions next year.
Starbucks management said Jan. 31 that the performers’s China business will represent approximately 25 percent of its on sales growth in fiscal 2018 and 2019. But after analyzing Starbucks’ disclosures and economic results for its China stores, Wedbush analyst Nick Setyan forewarns the Asian country will only produce 20 percent of the actors’s revenue growth in fiscal 2019.
As a result, he estimates Starbucks will coin same-store sales growth of 2.5 percent in fiscal 2019 versus the Brick up Street consensus of 3.3 percent and management’s long-term guidance of 3 percent to 5 percent.
“China assay points to lower contribution to overall revenue growth than original management commentary,” Setyan wrote in a note to clients Thursday. He amplified he no longer sees drivers of same-store sales growth and EPS consensus outlooks for fiscal 2018 and sees “rising risks to FY19 expectations.”
Starbucks slices fell 0.5 percent Thursday after the report.
Setyan break down his price target for Starbucks shares to $56 from $70. The new object is 3 percent lower than Wednesday’s closing price.
Starbucks sent the see through statement when asked for comment on this story:
“We continue to see Starbucks as a development company, uniquely positioned in our industry.”
— CNBC’s Michael Bloom role ined to this story.