Starbucks Corporation is brewing up a comeback

Starbucks Corporation (ticker: SBUX) stock has lagged many of its large-cap restaurant peers in the past year, but the company's recent struggles may soon be over. Stifel analyst Mark Astrachan has upgraded SBUX stock from "hold" to "buy" and says there's nothing wrong with Starbucks' innovation or core business.

Starbucks has fallen short of market expectations for U.S. comparable store sales growth for four consecutive quarters. According to Astrachan, that trend will soon be coming to an end.

"We believe the sequential declines in U.S. comp store sales growth ... were largely due to non-recurring factors," Asrachan says.

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In addition, he says investors should expect "improvement in overall and U.S. [comparable store sales] next quarter and for the remainder of [the fiscal year] driven largely by more favorable comparisons and, to a lesser extent, innovation."

Stifel now projects 5 to 6 percent U.S. comparable sales growth over at least the next four quarters.

See photos of Starbucks' new Unicorn Frappuccinos:

Starbucks Unicorn Frappuccinos
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Starbucks Unicorn Frappuccinos
it tastes like a pink nightmare
Sweet dream or a beautiful nightmare? 🦄 🌈💕✨ #unicornfrappuccino #starbucks
Yup I did it! Grande Unicorn @Starbucks. Quite tasty.
🦄 Unicorn Frappacino - cute but nasty.. like me 😈 (I took one sip & tossed it 🤢) #unicornfrappuccino
This is more magical than the Nimbus 2000 #unicornfrappuccino #Delish #DamnThatsDelish @starbucks
Sometimes, you just gotta let your #basicwhitegirl flag fly! 🦄
Self proclaimed unicorn queen here to tell u that unicorn fraps exist and the world is a more beautiful place 🦄✨ I rly like it!! It's like sour mango candy in a straw✨✨ if u don't like sour tho u will haaaaate it 😨 #unicornfrappuccino
I just figured it was an internet joke, but I guess it's real. Might actually be my favourite frappuccino... #unicornfrappuccino #yegstarbucks
"Mom, I believe in the drink, and I see the drink." Sure, lets sugar up before taking a road trip. 😎. I've been informed it's sweet and sour like unicorn farts. Yummy. #unicornfrappuccino #starbucks #momlife #fluff #sugarhigh
Soooo good! 🦄💎🦄💎 #unicornfrappuccino

Starbucks is in the process of rolling out a number of innovations, including text notifications when orders are ready and personalized recommendations via the Starbucks app. The company also is beefing up its cold brew and tea offerings.

Despite its disappointing sales numbers in the past year, Starbucks' innovation has allowed the coffee giant to maintain its reputation as a top choice among the coveted teen demographic. The latest Piper Jaffray bi-annual teen survey revealed Starbucks is the second choice behind only Chick-fil-A as the most preferred restaurant destination among teens.

Outside the restaurant segment, Astrachan says Starbucks also has growth potential in its packaged tea and coffee business, as well as its ready-to-drink beverage business.

Astrachan says Starbucks' stagnant share price has also made the stock a compelling value for investors relative to its peers.

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"SBUX shares trade at a 19 percent [price-to-earnings ratio] discount to restaurant peers and a 16 percent discount to five-year historical averages," he says.

Copyright 2017 U.S. News & World Report

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