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Headquartered in Seattle, Washington, Starbucks Corporation (SBUX) is a coffeehouse chain with a market cap of $88.29 billion. Starbucks operates one of the world's largest coffeehouse chains, serving millions of customers across over 80 markets. Its principal subsidiary, Starbucks Coffee Company, oversees the sourcing, roasting, and retailing high-quality arabica coffee and offers a wide range of beverages, food items, and merchandise.
Starbucks has significantly underperformed the broader market over the past year. The stock has declined 23.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 20.5%. In 2024 alone, the stock has lost 19.2%, compared to SPX's 15.8% gains on a YTD basis.
Narrowing the focus, SBUX’s underperformance is also evident compared to the Consumer Discretionary Select Sector SPDR Fund (XLY). The exchange-traded fund has gained 9.6% over this period. Moreover, the ETF’s 5.3% returns on a YTD basis outshine the stock’s loss over the same time frame.
Starbucks' stock rose 3.6% in the early trading session on July 31 despite reporting mixed earnings for fiscal Q3 2024. Earnings expectations were met at $0.93 per share, but sales forecasts of $9.1 billion were slightly missed. On Jul. 19, Starbucks' shares rose over 6% after the Wall Street Journal reported that activist investor Elliott Management acquired a significant stake in the company.
For the current fiscal year, ending in Sep. 2024, analysts expect SBUX’s EPS to grow marginally to $3.57 on a diluted basis. The company's earnings surprise history is mixed. It beat or matched the consensus estimate in two of the last four quarters while missing the forecast on the other two occasions.
Among the 26 analysts covering SBUX stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” and 15 “Holds.”
This configuration is slightly more bullish than three months ago, with nine suggesting a “Strong Buy.”
On Jul. 31, Morgan Stanley (MS) analyst Brian Harbour maintained a ‘Buy’ rating on Starbucks with a price target of $98, implying a potential upside of 25.7% from current levels.
The mean price target of $89.64 represents a 15% premium to SBUX’s current price levels. The Street-high price target of $112 suggests an ambitious upside potential of 43.7%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
