Starbucks Earnings: Strong Traffic, Cogent Investments Look Positive Despite Harsh Market Reaction

We believe that wide-moat Starbucks' fiscal second-quarter results were largely positive, despite a harsh market reaction (shares fell 5%-6% in aftermarket trading), and expect to increase our $103 fair value estimate by a low-single-digit percentage due to time value. As we see it, the market's reaction reflects disappointment in the firm's decision to maintain, rather than raise, its full-year guidance despite a strong quarter (shares have surged 16.5% over the past month).