Will Starbucks COO Come Back?

Is Starbucks (SBUX) COO Troy Alstead gone for good?

Zuma Press

JP Morgan analyst John Ivankoe hints at just that in a note published today. He remarks that CEO Howard Schultz comments regarding Alstead's decision to take an unpaid leave of absence to spend more time with his wife and kids "read as a goodbye with nothing suggesting the waiting of Troy's return back to the company."

As Ivankoe himself suggests, you can interpret Schultz's comments from today's press release for yourself:

Looking back on the 23 years we spent together side-by-side as Starbucks colleagues, I can recall so many memorable moments and accomplishments in which Troy can take pride in a job well done. Troy is a beloved Starbucks partner and has played an invaluable role in our growth as an enterprise and in the development of our culture as a performance-driven company balanced with humanity, which is unique for our industry. Troy's humanity and humility will be missed and we wish him the best.

Alstead's departure, announced earlier today, sent a ripple through the investment community, pushing the shares down 3.2% to $79.88 in recent trading.

Starbucks offers sabbaticals of as long as 12 months to employees who want to travel, pursue additional education or spend time with family. Such claims are often met with a skeptical eye roll from Wall Street. And earlier today, a company spokesman assured Bloomberg that Alstead, widely considered a contender to succeed Schultz as CEO, isn't departing because of his health or the company's performance.

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In fact, Alstead had considered taking a break in 2008, but was convinced by Shultz to stay as the company was reeling from a profit slump and store closing. And in an email to employees, Alstead wrote "the next year is for my wife and children, to give them my dedicated time and attention."

J.P. Morgan's Ivankoe, meanwhile, contends the mid to high $70 range remains a good entry point for the stock. He writes:

Our $89 price target on SBUX represents 24x C16 EPS of $3.71…To us, Starbucks classically fits a long term core growth investment profile. The 24x multiple we use is modestly above the company's 7-year 22x average but slightly below its historical ~8-point multiple premium to the S&P500.

Starbucks has climbed 6% over the past 12 months, lagging gains by the S&P 500.