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Pro Analysis

Starbucks to rally 19% on increasing revenue: Goldman

Howard Schultz, chairman and CEO of Starbucks
Adam Jeffery | CNBC
Howard Schultz, chairman and CEO of Starbucks

Investors should buy Starbucks shares on prospects of improving future sales growth and its attractive valuation, according to Goldman Sachs, which reiterated its buy rating and added the company to its Americas conviction buy list.

Starbucks last week reported fiscal third-quarter comparable stores sales of 4 percent versus the 5.7 percent consensus estimate.

"Looking at this breakdown over time supports the view that the loyalty transition was the disruption in the [third] quarter," Goldman's Karen Holthouse wrote in a note to clients Tuesday.

"With the loyalty noise in the past, SBUX is now in a position to tap into a pipeline that includes driving MOAP adoption, refined suggestive selling in the app, and better 1-1 marketing capabilities. We see this reaccelerating the contribution from 'other' towards historical levels and comfortably returning SBUX to a 5.0%-plus comp algorithm."