BTIG maintained its $130 price target.
Analysts note that the re-openings are “faster than expected,” and BTIG expects same-store sales to accelerate throughout the year.
“The combination of unfolding economic recovery, earnings upside and broad geographic profile leads us to become more positive on shares and upgrade accordingly,” wrote analysts led by Peter Saleh.
Proprietary data collected by BTIG shows that dining restrictions are the biggest obstacle for customers ages 18 to 24. More than one-third of those customers (35%) say they would be willing to dine out once the rules have eased.
Almost 30% of customers from age 25 to 34 expect to dine out once capacity limits lift.
“Easing dining restrictions across the country from California and Texas to New York and New Jersey have progressed at a faster pace than we anticipated,” BTIG said.
“We expect these younger cohorts flush with stimulus cash to venture out in the coming weeks, complimenting the sales benefit from older cohorts who have already been vaccinated.”
Stifel analysts expect there to be “pent-up demand” as restaurants reopen, with increased savings, improving employment numbers and other factors besides federal stimulus cash driving business. Analysts say that Texas, which has removed mask restrictions and allowed businesses to resume normally, may serve as a template of what’s to come.
Still, Stifel analysts are careful not to jump at “reopening stocks.” Stifel’s “favorites,” which analysts consider growth stocks, are Chipotle Mexican Grill Inc.
and Papa John’s International Inc.
“We believe the time to build positions in growth stocks is during periods when others are concerned about transient issues, such as difficult comp comparisons,” analysts said.
“The initiatives many of these concepts have in place should ultimately lead to a high level of sales retention in 2021, clearing the way for investors to focus on longer-term growth prospects and leading to improving sentiment in the back half of the year.”
JPMorgan analysts think restaurants will hang on to some of the ways in which they did business during the pandemic even after it’s over.
“Many restaurants will lead with more efficient, digitally-driven models and embrace off-premise as a permanently desired consumer need while maintaining their in-restaurant service levels as the situation fits,” analysts wrote.
Starbucks’ app and loyalty program were key to the business even before the pandemic.
Nonetheless, JPMorgan maintains its neutral stock rating and $97 price target for Starbucks.
“Consumption habits now largely broken in the US may take time to rebuild,” JPMorgan wrote.
“While we are pleased with Starbucks’ recovery thus far, its 15% urban exposure as part of 40% of non-drive-through U.S. company store exposure makes it difficult to say at this point that Starbucks is a net beneficiary in the near term of what has been a highly distributed COVID-19 era.”
Starbucks stock rose 2.4% after the BTIG upgrade and has nearly doubled, up 88.8%, over the past year.
The S&P 500 index
has gained 56.7% over the past 12 months.