Starbucks Ramps Up Long-Term Profit Forecasts, Shares Gain 3.5%

Shares of Starbucks rose over 3.5% on Wednesday’s extended trading after the multinational coffeehouse chain operator raised its long-term earnings forecast. Moreover, the company reiterated its fiscal 2021 guidance.

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Starbucks (SBUX) raised its earnings growth projection for fiscal 2023 and 2024 to a range of between 10% to 12%, up from its earlier growth forecast of at least 10%.

Commenting on 2021, the coffee giant said that it expects to benefit from a strong recovery as a result of the effects of the COVID-19 pandemic. Starbucks projected 2021 non-GAAP earnings in the range of between $2.70-$2.90 per share. For fiscal 2022, Starbucks forecasted “outsized” growth in non-GAAP EPS of at least 20%. (See SBUX stock analysis on TipRanks)

“We have further streamlined the company, sharpened our focus on accelerating growth in our two lead markets of the U.S. and China, and expanded our global reach through the Global Coffee Alliance with Nestlé while increasing returns to all of our stakeholders,” said Strabuck’s CEO Kevin Johnson. “Looking ahead, coffee remains a very large and attractive market that is growing globally. We are focused on growing category share and believe Starbucks is better positioned than ever for continued success.”

On Dec. 4, Barclays analyst Jeff Bernstein raised the stock’s price target to $112 (11.6% upside potential) from $103 and reiterated a Buy rating. Bernstein expects the company’s segments to exceed previous peaks post COVID-19.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 11 Holds. The average price target stands at $98.53 and implies downside potential of about 1.9% to current levels. Shares have increased by 14.2% year-to-date.