Starbucks (NASDAQ:SBUX) Focusing on Margins, China

After falling from being one of the darlings of Wall Street, Starbucks (NASDAQ:SBUX) has quietly fought its way back over the last couple of years and looks poised for revenue and earnings growth as the focus on China and widening margins.

Deutsche (NYSE:DB) said, "A change in mindset can be a powerful enabler. Starbucks presented its domestic business with an eye toward enhancing margins, its International business focused on creating positive mix in China and a stable capex build, and finally its CPG business highlighted unique competitive advantages to drive high margin growth. Happily, we saw sparse evidence of the purely store-based growth metrics and simple demographic cases (i.e. low penetration) for growth. Return implications are bullish.

"Moving 2011 forecast $0.02 to $1.52, 2010 $$0.07 higher to $1.70 Changes are driven by slightly higher store growth more in line-with company targets, slightly higher comps, CPG growth and further gains on the cost side."

Deutsche Bank maintains a "Buy" rating on Starbucks, which closed Thursday at $32.76, gaining $1.06, or 3.34 percent. They have a price target of $35 on Starbucks, raising it from $33.