Starbucks’s (SBUX) lowering of its 2017 EPS (earnings per share) guidance, announcement of the closing of all 379 Teavana stores, and lower-than-expected fiscal 3Q17 same-store sales growth may have compelled analysts to lower their 12-month target price.
As of July 31, 2017, analysts expect Starbucks stock to reach $64.08 in the next 12 months, which represents a potential return of 18.7%. Before the fiscal 3Q17 earnings release, the company had forecast a price target of $66.52.
After the 3Q17 earnings announcement, many analysts lowered their price target. On July 28, 2017, UBS cut its 12-month target price from $70 to $67, and RBC lowered its target price from $66 to $63. On the same day, Credit Suisse lowered its target price from $57 to $56, and Morgan Stanley cut its target price from $71 to $68. Peers’ target prices and return potential are as follows:
Of the 33 analysts that follow Starbucks, 75.8% recommend “buy” and 24.2% recommend “hold.” None of the analysts recommend “sell.” Although Starbucks’s target price is higher than its current stock price, this does not mean an automatic “buy.” Investors should look at various parameters, as discussed in this series, before making investment decisions.