Starbucks Shows One of the Widest Moats in Consumer Stocks

We're planning a modest increase to our $60 fair value estimate for time-value-of-money adjustments, but see few downside catalysts on the horizon. Management's initial 2016 guidance strikes us as realistic (if not conservative) with so many brand- and technology-related tailwinds at its back (including the global rollout of Mobile Order & Pay). Targets include 1,800 net new store openings (implying 12% unit growth), comp growth "somewhat above the midsingle digits", operating margins increasing slightly (versus adjusted operating margins of 19.1% in 2015), and adjusted EPS of $1.87-$1.89, consistent with our model. We view shares as fairly valued, but would not require much margin of safety before taking a position.

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