WR Hambrecht Keeps Buy on Starbucks

Analyst Craig Bibb says a combination of rising margins, accelerating square footage growth, and other factors strongly affirm the bull case

Starbucks (SBUX ) posts 31 cents third-quarter earnings per share, and sees $1.44-$1.47 fiscal year 2006 EPS. WR Hambrecht reiterates a buy rating on the stock.

Analyst Craig Bibb says the coffee chain's 31 cents third-quarter EPS beat his estimate by 2 cents and the Street's forecast by 1 cent. He notes the company upped fiscal year 2005 (September) outlook to $1.19-$1.20, and established $1.44-$1.47 fiscal year 2006 estimate that likely exceeded Street expectations.

Bibb also notes the company chose to step up its U.S. company-owned store opening plans from 550 units in fiscal year 2005 to 700 units in fiscal year 2006; he expected only 610 units. He says a combination of rising margins, accelerating square footage growth, and other factors strongly affirm the bull case for Starbucks.

He raises his $1.18 fiscal year 2005 EPS estimate to $1.19, and $1.43 for fiscal year 2006 to $1.45. He hikes his $63 price target to $65.

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