Here's That Morgan Stanley Starbucks Upgrade That's Sending The Stock Higher

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Morgan Stanley upgraded Starbucks this morning and the stock is now up around 3%.Here’s the quick summary

“We upgrade the shares of SBUX to Overweight from Equal-weight as we see the company making fundamental transitions in FY12 including the resumption of both domestic and international unit growth, bringing its packaged coffee business in-house and entering the rapidly growing $3 B global single-serve coffee market. Based on our AlphaWise survey results, we see a near-term opportunity to take up to 30% share in this category. The resulting incremental revenue should not only lift EPS growth to a sustainable 15-20%, making SBUX the fastest growing large cap restaurant, but also drive 200-300 bp of ROIC improvement, leading to further multiple expansion, in our view. We’re raising our base case FY12e EPS to $1.85 (from $1.75), or 5% ahead of the Street, but our bull case suggests ’12e EPS could be another $0.20+ higher, depending on the rate of single-serve growth.”

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