Starbucks customers may look right past union fight
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BTIG reiterated a Buy rating on Starbucks Corporation (SBUX -0.7%) after a deep dive into the implications of the unionization push at the coffee store chain.
Analyst Peter Saleh said investors should focus on Buffalo, New York as the market that will set the precedent for any negotiations and contracts across the country.
Saleh said the understanding is that the Buffalo location has one year from the end of December 2021 to execute a union contract or else face the possibility of dissolving the union. Federal law requires Starbucks (NASDAQ:SBUX) to negotiate with unions, but the companies do not have to sign a contract necessarily.
What if no union agreement is worked out? A new survey conducted by BTIG indicated that consumers are unlikely to abandon Starbucks if the unionization fails.
Only 4% of the customers polled indicated that they would never visit again if Starbucks (SBUX) and the unions failed to reach an agreement, while the vast majority or 68% said it would have no impact on visit frequency.
While staying bullish on SBUX, Saleh and team cut FY22 and FY23 EPS estimates to reflect the suspension in share repurchase and the likelihood of additional wages or benefits to appease partners and stave off the unionization effort.
BTIG has a price target of $110 on Starbucks (SBUX) vs. the 52-week trading range of $78.88 to $126.32.