The roaster and retailer of specialty coffee Starbucks (NASDAQ:SBUX) will release its second quarter Fiscal 2023 financial results on Tuesday, May 2. The ongoing momentum in its global comps (comparable sales), favorable weather conditions, and benefits from the easing of COVID-related mobility restrictions in the international markets, primarily China, should support its top and bottom line numbers in fiscal Q2.
Analysts expect SBUX to report revenue of $8.4 billion in Q2, reflecting a year-over-year improvement of approximately 10%.
While leverage from higher comps, pricing, and productivity gains is expected to support its profitability, near-term headwinds in China could adversely impact its margins in Q2. Analysts expect Starbucks to post earnings of $0.65 a share in Q2, compared to an adjusted EPS of $0.59 in the prior-year quarter.
On April 26, Robert W. Baird analyst David Tarantino, in a note to investors, said that he expects SBUX to exceed consensus estimates. Moreover, the analyst sees the potential for an upward revision in Fiscal 2023 EPS guidance.
Tarantino expects Starbucks to deliver better-than-expected comps, reflecting favorable weather conditions and improvements in China due to the easing of COVID-led restrictions. The analyst expects SBUX’s U.S. comps to grow by double-digits compared to the consensus estimate of 9% growth.
Leverage from higher comps will likely cushion its earnings, noted Tarantino.
While SBUX’s comps will likely drive its top and bottom lines, the company could continue to boost its shareholders’ returns through share repurchases and dividend payments. The company resumed its share buyback program in the first quarter of Fiscal 2023 and expects to accelerate it further in the coming quarters.
What’s the Prediction for SBUX Stock?
While Tarantino is bullish about the company’s long-term prospects, near-term macro headwinds keep the analyst sidelined on Starbucks stock. Including Tarantino, SBUX stock has 11 Hold recommendations. At the same time, SBUX stock has nine Buy recommendations and a Moderate Buy Consensus rating on TipRanks ahead of Q2 results.
While analysts are cautiously optimistic about SBUX stock, our easy-to-understand and simple technical analysis tool reveals that SBUX stock is trading higher than its 50-Day and 20-Day EMA (exponential moving average), confirming a bullish trend.
SBUX stock has gained over 56% in one year. Given the recent uptrend, analysts’ average price target of $114.5 is in line with its closing price on April 28.