Starbucks (SBUX) fiscal Q3 North America same-store sales are poised to be in-line with consensus, with the business seeing momentum on comparisons benefiting from labor investments, store closures, sales transfer, and extended operating hours, RBC Capital Markets said in a note.

RBC further said on Thursday that it is modeling fiscal Q3 margins to be in-line with consensus and that key investor debate would center around Starbucks' progress against its cost cuts worth $2 billion over three years.

Additionally, fears of El Nino climate phenomenon impacting production have raised coffee prices in the recent weeks, which could have a material impact on the company's margins, RBC said, adding that it will look for color on how Starbucks is managing its exposure to the commodity.

Starbucks is scheduled to report its fiscal Q3 results on July 29.

RBC maintained its sector perform rating on the company's stock with a $110 price target.

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