Analysts weigh in on coffee giant Starbucks Corporation (NASDAQ:SBUX) and credit card giant American Express Company (NYSE:AXP), as both companies released their quarterly results yesterday after market close.
William Blair analyst Sharon Zackfia reiterated an Outperform rating on shares of Starbucks, after the company’s fiscal first-quarter operating EPS rose 16%, to $0.46, a penny above the analyst and the consensus estimates and above guidance of $0.44 to $0.45. However, guidance for full-year EPS of $1.87 to $1.89 remained unchanged.
Zackfia commented, “We are maintaining our fiscal 2016 EPS estimate of $1.89, up 20% and in line with consensus, predicated on an approximate 6% comp gain. For fiscal 2017, our estimate is $2.17, up 15% and roughly in line with consensus of $2.18.” The analyst continued, “At 30 times our 2016 calendar estimate, we continue to view Starbucks as a core large-cap consumer name given its resilient sales trends, strong expansion prospects, and high visibility on 15% to 20% annual EPS growth.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sharon Zackfia has a yearly average return of -2.8% and a 37% success rate. Zackfia has a 26.8% average return when recommending SBUX, and is ranked #2720 out of 3586 analysts.
Out of the 19 analysts polled by TipRanks, 17 rate Starbucks stock a Buy, while 2 rate the stock a Hold. With a return potential of 12.3%, the stock’s consensus target price stands at $66.06.
American Express Company
American Express shares plunged more than 12 percent Friday, after the company reported a 38% decline in fourth-quarter earnings. Furthermore, the company’s guidance for earnings was worse than expected.
However, Deutsche Bank analyst David Ho remains bullish on the stock, reiterating a buy recommendation and price target of $90, which implies an upside of 64% from current levels.
Ho wrote, “Investors will likely be disappointed by mgmt’s $5.60 EPS outlook for 2017 near-term, but mgmt’s new guidance finally “marks to market” worsening conditions vs. last Feb and makes it easier to establish a “floor” to the shares (i.e. for now, investors simply take 10-12x $5.60 to get $56-67 as DFS/COF trade at 7-8x consensus 2017E).”
The analyst continued, “With more clarity on expenses and Costco, the focus can be on upside to underlying growth. For example, we think AXP has an opportunity this year to use its capital lever to generate revenue upside: we believe investors would reward AXP more for using freed up regulatory capital from Costco (of ~$1.4b, or assuming 10% supporting $14b of RWA) to win/preserve the Marriott-Starwood relationship versus a one-time buyback.”
According to TipRanks.com, analyst David Ho has a yearly average return of -11.7% and a 13.9% success rate. Ho has a -18.1% average return when recommending AXP, and is ranked #3301 out of 3586 analysts.
Most of the analysts covering American Express remain neutral on the company’s stock. A total of 13 analysts provided ratings in the last 3 months; 3 of them suggest a Buy, 6 recommend a Hold rating, while 4 suggest to Sell. The 12-month consensus mean price target for the stock is $70.18, reflecting a 28% upside from current levels.