Should you buy Starbucks shares after record revenue in Q4?
- Starbucks Corp says its revenue climbed to a record high in Q4.
- BofA's Sara Senatore sees upside in Starbucks shares to $109.
- Shares of the coffee chain are down more than 20% for the year.
Shares of Starbucks Corporation (NASDAQ: SBUX) are trading fairly up this morning after the coffee chain said its revenue climbed to a record high in the fiscal fourth quarter.
Are Starbucks shares worth buying?
Sure, its results topped Street estimates but there were still a few pockets of concern in there. For instance, same-store sales were down 16% in China, thanks to its notorious zero-COVID policy. That led to an overall 5.0% hit to the international same-store sales this quarter.
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Then of course there’s fear of a recession that could weigh on consumer spending, thereby hurting Starbucks’ blockbuster performance moving forward.
U.S. same-store sales (up 11%) was one of the best numbers we’ve seen this quarter. They’re just getting started with a lot of opportunities they have on the demand side, customization, cold.
Senatore sees upside in the Nasdaq-listed firm to $109 – that’s another 20% up from here.
Customisation gives a unique edge to Starbucks
Senatore is bullish on Starbucks’ loyalty programme as well. She does agree that a “customised” beverage at Starbucks Corporation costs more, which raises questions on sustainability of its growth in the face of a recession but said:
Customers aren’t expressing any real price resistance to Starbucks. [Customisation] costs more, but it also makes the drink very special and specific to the customer. It means they can’t get that beverage anyplace else.
A proof of that “no resistance” was a 1.0% year-on-year increase in transactions this quarter despite the price increases. You can read the full earnings press release here.
Starbucks shares are currently down more than 20% for the year.