Analysts look past Starbucks vanilla numbers, focus on mobile push

Fri Apr 22, 2016 11:12am EDT
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(Reuters) - Starbucks Corp's (SBUX.O: Quote) quarterly numbers may not have been enough to satisfy investors craving a stronger cup of joe, but analysts believe its long-term growth prospects remain solid.

Shares of the world's largest coffee chain fell nearly 6 percent on Friday, a day after Starbucks reported second-quarter comparable sales growth below Wall Street's expectations.

Yet, the stock is not too far from the record high it hit in October.

It has risen 16 percent from its 2016 low touched on Feb. 8, staying more expensive than shares of Dunkin Brands Group Inc (DNKN.O: Quote) and McDonald's Corp (MCD.N: Quote).

"We remain convinced that Starbucks' digital platform, including the rapidly growing Mobile Order & Pay, continues to be a significant competitive advantage and long-term sales driver," BTIG analysts wrote in a note.

"We see any near-term sales disruption as minor compared to the significance of the program," BTIG analysts wrote.

Starbucks irked some customers by tweaking its popular loyalty program, giving rewards based on dollars spent rather than number of purchases.

Growth in sales at Starbucks cafes in the Americas open for at least a year slowed to 7 percent in the quarter from 9 percent in the first quarter. The company gets about two-thirds of its total revenue from the region.

Investors had likely expected an increase of 8 percent, Nomura analysts said.   Continued...

A staff serves beverages at a Starbucks coffee shop in Seoul, South Korea, March 7, 2016. Picture taken March 7, 2016. REUTERS/Kim Hong-Ji