-- Starbucks' (SBUX) near-term comps are benefitting from recent labor investments, store closures, and longer operating hours, but debate remains over the sustainability of mid-single-digit North America comps after these benefits are fully reflected in 2027, RBC Capital Markets said Thursday.
RBC lifted its North America same-store-sales growth estimates to 5%, 114 basis points above Street consensus of 3.9%.
While the firm's Q2 revenue estimate is only slightly behind consensus, its EBIT and EPS estimates are 4.3% and 6.0% below consensus, respectively, as it believes the Street is modeling year over year margin improvement too aggressively, according to the note.
RBC said better comparable sales drove its Q2 revenue and EPS estimates 1.3% and 8.3% higher. The brokerage also lifted Q3 North America same-store-sales estimate by 100 basis points to 5% and lowered Q4 to 4% from 4.5%.
For H2 and beyond, RBC lowered its estimates to account for the sale of China business, according to the note.
RBC maintained a sector perform rating on Starbucks with a price target of $105.
Price: $101.12, Change: $+2.76, Percent Change: +2.81%