Quo Vadis is confident on Starbucks Corporation ahead of the company's earnings report on August 2.
Analyst John Zolidis points to positive fundamental trends such as the transformation of the Starbucks (SBUX) U.S. store base and shift of capital allocation to higher productivity drive-thru formats from sit-down cafes.
"This should benefit average unit volumes , margins and returns over time. Starbucks is also benefiting from multiple years of investment in menu as consumers shift to purchases to cold beverages. These carry higher average selling prices due to increased customization and larger sizes relative to hot beverages," he noted.
The result for SBUX could be a boost to comparable sales that is not as dependent on the pricing seen elsewhere.
The coffee chain is also expected to benefit from a recovery from a reopening in China, where cafes are noted to generate higher financial returns on average.
Starbucks (SBUX) could have some big catalysts ahead with the September 12 analyst day in Seattle expected to include guidance and strategy updates, as well as potentially the appointment of a new CEO to take over for Howard Schultz.
Quo Vadis is a buyer ahead of those events with SBUX trading at modest discounts to the longer-term forward average multiples.