Starbucks reports in-line Q3 earnings as sales miss on China weakness; shares up

Investing.com – Starbucks reported Tuesday mixed fiscal third-quarter results, with earnings matching and revenue missing Wall Street estimates as weaker sales in China weighed. 

Starbucks Corporation (NASDAQ:) shares climbed over 2% in premarket trade Wednesday.

Starbucks earnings of $0.93 on revenue of $9.1 billion. Analysts polled by Investing.com anticipated EPS of $0.93 cents on revenue of $9.25B.

The miss on the top line comes as economic weakness in China, a key market segment for the company, continues to weigh on spending. 

Global comparable store sales declined 3% missing estimates for a 2.7% decline. 

North America comparable store sales fell 2%, though weakness was kept in check by price hikes.

China comparable store sales declined 14%, driven by a 7% decline in both average ticket and comparable transactions. 

In the wake of the report, KeyBanc Capital Markets analysts trimmed their Starbucks EPS estimates for fiscal 2024 and 2025 to $3.53 and $3.93, respectively “to reflect slightly lower” near-term (NT) comparable sales growth.

Analysts maintained a Sector Weight rating on the stock, stating they “believe the stock’s current valuation at 21.5x FY24 EPS fairly balances the NT uncertainty with its potential to return to sustained growth over the LT.”

Meanwhile, TD Cowen analysts said SBUX “is embracing new avenues for stock appreciation including newly identified G&A savings and the first acknowledgement of exploring strategic alternatives for the China business.”

Analysts reaffirmed a Hold rating and the price target of $81 on the stock as they “do not expect this path to generate multiple expansion.”

Yasin Ebrahim contributed to this report.