Market Share of Starbucks

As the world prepares to distribute coronavirus vaccines, Starbucks is projecting a strong rebound to demand
for its coffee by 2022. CFO Pat Grismer reiterated the company’s fiscal 2021 forecast of adjusted earnings per
share of $2.70 to $2.90 at the company’s biennial investor day. By fiscal 2022, which will start in October, the
coffee chain is forecasting growth of more than 20% as it laps weaker earnings growth.
In 2023 and 2024, Starbucks expects to hit long-term growth targets, with adjusted earnings per share
growth of 10% to 12%. Shares of Starbucks rose more than 4% in extended trading on the news. The stock,
which has a market value of $122 billion, has risen 18% so far this year.
Grismer also told investors that Starbucks is slightly raising its forecast for ongoing long-term revenue growth
to a range of 8% to 10%. At its last investor meeting in 2018, the company said it expected adjusted earnings
per share to rise at least 10% annually and consolidated revenue growth of 7% to 9% over the long term.
Starbucks is projecting net new unit growth of 6% worldwide as it strives to reach 55,000 cafes globally by
2030. It’s expecting about 3% new unit growth in the United States, down slightly from its prior range of 3%
to 4%. In China, its second-largest market, it’s forecasting new location growth in the low teens, down from
its prior outlook in the mid-teens. Adding more locations will help the global coffee giant reach new
customers as it predicts that the global addressable market for coffee will reach $450 billion by 2023.
Currently, it has a store footprint of nearly 33,000.
The projections assume that Starbucks will not experience any additional business interruptions and stable
foreign exchange rates.
The Starbucks share price gained 20.4% in 2020, as the US based Coffee Chain adapted to global restrictions
on food service businesses during the Corona Virus Pandemic. The company increased its collection and
delivery options to continue to serve customers during lockdown restrictions and it continued to expand its
reach by opening new stores during the year.
With Covid-19 vaccinations expected to ease lockdown measures after cases of the virus have spiked during
the winter, will Starbucks stocks go up further this year?
The restaurant industries faced a lot of challenges in the year 2020 due to the lockdown that were
announced by the government of various countries to prevent the spread of Corona virus. Coffee chains such
as Starbucks were also affected by the large-scale shift to working from home, denting sales from workers
making purchases on the way to work or during coffee breaks.
Goldman-Sachs analyst Jared Garber initiated coverage of the restaurant industry in a research note on
January 21 with a positive view of the sector, stating that “large chains are positioned to benefit from the
rapid digital transformation and independent restaurant challenges.” Garber estimates that the restaurant
industry lost a massive $150bn in value in 2020, forcing some small and independent restaurants to close
permanently. That gives large chains the opportunity to boost their market share by five per cent, from 20
per cent in 2019 to 25 per cent in 2021. Chains like Starbucks and McDonalds are set to benefit, while
Restaurant Brands International, which owns Burger King and Tim Hortons, is likely to face competitive
pressure, Garber said.
Analyst consensus puts the stock at a buy, although the average price target suggests the share price could
slip back below the $100 level. The average 12-month Starbucks share price forecast from 27 analysts that
have issued ratings is $98.36 per share, with a low estimate of $65 and a high of $120 per share, according
to MarketBeat. There are 15 buy ratings and 12 hold ratings, with none of the analysts recommending
selling the stock.
Goldman Sachs initiated coverage of the share price on January 19 with an SBUX stock forecast of $115 per
share and a buy rating. MKM Partners analyst Brett Levy on January 21 reiterated a neutral rating on the
stock and a price target of $104 per share.