Starbucks' growth plans impress Wall Street

Starbucks (SBUX) chief executive Howard Schultz isn't satisfied with heading a company that's synonymous with coffee, thanks to its 22,000 retail stores in 66 countries. That's the message Wall Street analysts received loud and clear during the java chain's investor conference on Thursday.

The Seattle-based company has high hopes for its new high-end retail concept and plans for mobile ordering and delivery, which have also impressed many investors.

In a note released to clients today, Robert W. Baird analyst David Tarantino wrote that he came away from the meeting with "renewed confidence that (Starbucks) is well positioned to deliver healthy EPS (earnings per share) growth in F2015 and beyond, and we are increasingly optimistic that a range of newer drivers (particularly mobile order and pay) can help to reinvigorate same-store traffic momentum." He rates Starbucks as an "outperform."

Customers at the Starbucks Reserve Roastery and Tasting Room will get what the company calls "the most authentic representation of the roasting process" in the 15,000-square-foot store that will also feature food developed by Seattle chef Tom Douglas. The first Starbucks Reserve Roastery opened today in Seattle's Capitol Hill Neighborhood, just nine blocks from the original Starbucks.

The chain plans to have at least 100 of these stores in key markets such as New York, San Francisco, Los Angeles, Chicago and Washington, D.C. An Asian location is set to debut in 2016.

"Everything we've ever done has led us to this point," said Schultz in a statement. "This is the moment of the next generation of Starbucks."

Shares of Starbucks, which have climbed 7 percent this year, rose $2.26, or 2.8 percent, to close at $83.57 in Friday afternoon trading.

In a separate announcement this week, Starbucks unveiled a feature in Portland, Ore., that enables customers to place orders at their local shops to be picked up later. The chain plans roll out the service nationally next year when it will offer deliveries in more markets.

Speaking about Schultz, Janney Capital Markets analyst Mark Kalinowski told CBS MoneyWatch: "It's my job to be skeptical of everybody, even the Willie Wonka of the coffee industry." He added that Starbucks has "an exceptional management team" with a product that "resonates with today's consumers."

In a note issued to clients today, Kalinowski predicted that Starbucks will overtake McDonald's (MCD), the company most associated with fast food, in terms of market capitalization by 2025.

If that comes true, it would represent a drastic change in circumstances for both companies. Starbucks is currently valued at about $61 billion, while McDonald's is worth $93 billion. His call represents both a vote of confidence in Schultz and a recognition of the increased competition facing McDonalds, which has stumbled in recent years.

Janney seeks to do investment banking business with Starbucks and rates the coffee chain as a "buy." It ranks McDonald's as a "neutral."

Many analysts, such as RJ Hottovy, believe Schultz will be able to back up his words with deeds. He thinks the stock is fairly valued at $84, near where it currently trades.

"At a time when most restaurants and retailers are struggling to stimulate traffic growth, Starbucks transaction gains are impressive and underpin the global strength of its brand," Hottovy wrote in a note to clients. "Starbucks is much more than a retail story, however, and we believe the company is just beginning to scratch the surface of its longer-term channel development, brand diversification and geographic expansion opportunities."