Starbucks (SBUX) is trading at $58.90 as of January 14, 2016. Many of the estimates we’ve seen in this series have already been baked into the company’s share price. Let’s look at analysts’ recommendations and price targets for Starbucks’s share price over the next year.
As of January 14, 2016, Wall Street analysts have a price target of $68.30 for the next 12 months for Starbucks. This represents a 15% upside from the company’s current share price of $58.90.
Now let’s look at analysts’ ratings for Starbucks. About 79% of analysts have “buy” recommendations for Starbucks, 21% have “hold” recommendations, and none has “sell” recommendations, according to Bloomberg Consensus, which surveyed 29 analysts. Overall, the stock has a “buy” rating. Over the years, we’ve seen Starbucks’s share price move in tandem with analysts’ recommendations. When analysts raised their next-12-month price targets, the share price also increased, and vice versa.
Starbucks’s share price, which is trading below analysts’ consensus target price, doesn’t necessarily mean the company is a “buy.” Investors have to be careful to also look at where the company’s valuation multiples are trading, which we discussed earlier in this series.
You can also access Starbucks through the Consumer Discretionary Select Sector SPDR ETF (XLY). XLY has 3% in Starbucks (SBUX), 4% in McDonald’s (MCD), 1% in Chipotle Mexican Grill (CMG), and 1.5% in Yum! Brands (YUM).
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