Starbucks (NASDAQ: ) reports worse-than expected Q2 comparable sales and adjusted earnings, but shares remain up above 6% pre-open Wednesday because results were better than anticipated.

According to consensus estimates, the coffeehouse chain posted Q2 adjusted earnings per share of 59c. Analysts expected $7.62 billion but the actual figure was $7.64 billion.

Comparable sales increased 7% during the third quarter. This was lower than the analyst consensus estimate of 7.51% growth. North America’s business saw a better performance than expected, with comp sales growing 12% against the 8.66% forecast.

“Given record demand and changes in customer behavior we are accelerating our store growth plans, primarily adding high-returning drive-thrus, and accelerating renovation programs so we can better meet demand and serve our customers where they are,” said interim CEO Howard Schultz.

Evercore ISI analyst David Palmer upgraded Starbucks shares to Outperform from In Line with a $95.00 per share price target as results were “less fearful of the big step-down.”

“We had been concerned that Howard’s return would include another major step-up in labor and/or overhead expense in fiscal 2023. Some incremental expenses (e.g. tech spending in G&A), we do not see such an investment as a major setback to the earnings recovery as we look at a likely margin recovery in China and the US,” Palmer said and added he sees a strong risk-reward in SBUX stock.

John Glass, Morgan Stanley analyst, lowered the price target from $94.00 to $87.00 per shares but maintained his optimism about long-term SBUX stock.

“Fear of the unknown was the greatest driver of the stock’s decline over the past quarter. The list of unknowns is now shorter: how China will impact the economy, inflation’s duration, what incremental investments are needed for FY23, as well as the amount of money required to help the agenda to improve the sales engine. We also know the timeline to make these changes. But at least we now know when we will be better informed (Sept.22), that demand in the US and many other regions remains strong,” Glass said to clients.

Dennis Geiger, UBS analyst, also reduced the PT from $86.00 for Neutral-rated SBUX shares to $82.00.

“Intact consumer demand, upcoming investments, and brand strength should help SBUX emerge post-pandemic better positioned. Focus now is on any add’l necessary investment to meet demand and resulting impacts to FY23 margin & earnings power to better assess current valuation and medium-term upside potential,” Geiger added.

By Senad Karaahmetovic