Starbucks’ (NASDAQ:SBUX) fiscal Q3 results offered “encouraging elements,” including earnings per share of $1, which is ahead of consensus, Morgan Stanley said in a Wednesday note.
Morgan Stanley noted that the coffee company showed anticipated margin progress despite a modest US topline miss.
The investment bank said it sees the company’s Q4 as mainly China driven and the Channel Development segment softening against expectations.
Starbucks said in its fiscal Q3 earnings release Tuesday that stores in the US and China comprised 61% of its global portfolio at the end of the quarter.
“Near term, it’s unclear to us if questions about moderating US comps and a still slow China recovery are going away,” Morgan Stanley said.
Morgan Stanley maintained the company’s equal-weight rating and $104 price target.