Dec. 05--Starbucks will be worth more than McDonald's by 2025 as the coffee chain finds new ways to grow and the burger giant's sales stall, an analyst said Friday.
Mark Kalinowski, of Janney Capital Markets, made the prediction after attending an analysts meeting hosted by Starbucks this week. Market capitalization is calculated by multiplying the number of a company's shares by their price. Starbucks' market capitalization currently is $61 billion. McDonald's is valued at $93 billion.
Kalinowski said in an analyst note that sales growth at Starbucks stores open at least a year should remain above the industry average, and he said there is potential for the chain to expand further in the United States and abroad, including in China.
"We believe Starbucks can successfully position itself as a higher-end purveyor of all sorts of noncoffee items," including Teavana teas, Fizzio sodas and La Boulange baked goods," Kalinowski said.
Starbucks CEO Howard Schultz also still appears "highly engaged" in the business, Kalinowski said.
McDonald's has struggled with lagging sales around the world this year, and sales this summer hit their worst point in more than a decade. Starbucks said Thursday it will add beer, wine, and evening snacks to thousands of domestic cafes, widen lunch offerings and roll out mobile ordering to boost U.S. sales.
Kalinowski currently has a "buy" recommendation on Starbucks' stock, compared with a "neutral" on McDonald's.
The analyst's note disclosed that Janney plans to seek or expects to be paid for investment banking services from Starbucks in coming months, and that the analyst is paid based partly on Janney's profits, which might come from investment banking revenue.
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