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Analysts Favor ‘Hold’ for Starbucks

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Price target

On June 22, analysts were expecting Starbucks (SBUX) stock to reach $61.39 in the next 12 months, which represents a 19.8% return based on its June 22 stock price of $51.24. Starbucks’s lower-than-expected fiscal third-quarter SSSG (same-store sales growth) guidance appears to have prompted many analysts to lower their price targets, with Morgan Stanley lowering it from $72 to $59, Barclays from $65 to $60, Wedbush from $58 to $57, and BMO from $58 to $56. Cowen and Company, Telsey Advisory, Mizuho, and Wells Fargo also lowered their price targets.

Peers’ price targets and return potential are as follows:

  • Dunkin’ Brands (DNKN) has a price target of $64.21, which represents an 8.0% fall from its current stock price.
  • McDonald’s (MCD) price target is $186.69, implying a return potential of 13.5%.
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Analysts’ recommendations

Of the 32 analysts following Starbucks, 46.9% recommend “buy,” 50.0% recommend “hold,” and 3.1% recommend “sell.” After the company’s fiscal third-quarter SSSG guidance announcement, Telsey Advisory lowered its rating from “outperform” to “market perform,” while Morgan Stanley downgraded it to “equal weight” from “overweight.”

Starbucks’s stock price moves in tandem with analysts’ ratings. When analysts lower their price targets, its stock moves down, and vice versa. Although Starbucks is trading below analysts’ price target, it is not an automatic “buy.” Investors are advised to analyze analysts’ estimates before making any investment decisions.

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