Morgan Stanley (MS) Boosts Starbucks (SBUX) on Sustainable Growth

Starbucks Corp. (NASDAQ:SBUX) got a boost in its ratings and share price, as Morgan Stanley (NYSE:MS) upgraded the company, citing sustainable growth and single-serve market.

Morgan Stanley gave three reasons for the upgrade, "1) Resurrection of unit growth domestically and validation of international operating margins greatly expands global growth opportunities; with a pick up in growth to 4-5%. 2) Likely entry into the single-serve market is a $300-500 million revenue opportunity over the next 2-3 years; our survey work suggests significant pent-up demand for SBUX single-serve coffee. 3) Underappreciated B/S story increases the likelihood of greater cash distribution to shareholders."

Saying 30 percent of current single serve coffee users may switch to Starbucks if offered, shares of single serve coffee retailer Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) dropped.

Starbucks was trading at $33.53, up $0.41, or 1.24 percent, as of 1:19 PM EST. Green Mountain Coffee Roasters dropped $40.93, down $0.82, or 1.96 percent.