Montgomery Securities Initiates Coverage of Starbucks Corp. with a BUY Rating

Business Wire, May 2, 1996

SAN FRANCISCO--(BUSINESS WIRE)--May 2, 1996--Montgomery Securities Analyst Michael Moe has initiated coverage of Starbucks Corp. (NASDAQ:SBUX) with a BUY rating.

Moe expects the company to earn $0.47 per share in Fiscal Year (October 1) 1996 and $0.70 per share in Fiscal Year 1997. His 12-month target price is $40, or 47% above current levels, based on the shares of Starbucks selling at 100% of its P/E to growth for fiscal 1998 EPS estimate of $1.00.

Starbucks Corp. is a Seattle-based retailer and wholesaler of gourmet coffee. The company has established itself as the premier specialty coffee brand and has gained customer loyalty through its superior quality coffee and service. By leveraging its brand equity, Starbucks has expanded its business into channels such as mail order, specialty sales to progressive retailers, fine restaurants and most recently United Airlines. The company has also entered into joint ventures with Pepsi, Redhook Ale Brewery, and Dreyer's Ice Cream.

Moe's BUY rating is based on his belief that Starbucks can increase earnings at a treadline rate of 40% for the next 3-5 years, with the likely opportunity of being a billion-dollar-plus company by the end of the calendar year 1997.

CONTACT: Montgomery Securities, San Francisco

Michael Moe, 415/627-2688

Elizabeth Snowdon, 415/627-2747

esnowdon@montgomery.com