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Analysts Favor ‘Hold’ Ratings on Starbucks

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Analysts’ recommendations

Since Starbucks (SBUX) reported its second-quarter earnings results on April 25, several analysts have raised their price targets on its stock.

  • BMO raised its target from $60 to $70.
  • Wedbush raised its target from $70 to $75.
  • Cowen and Company raised its target from $69 to $71.
  • JPMorgan Chase raised its target from $70 to $81.
  • Morgan Stanley raised its target from $70 to $75.
  • Piper Jaffray raised its target from $70 to $77.

However, Wells Fargo downgraded the stock from an “outperform” to a “market perform” and lowered its price target from $83 to $80. Wells Fargo cited a high valuation multiple, increased competition in China, and a tough same-store sales growth comparison for Starbucks in fiscal 2020.

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Analysts are mostly favoring inaction on Starbucks, with 58.6% of the 29 analysts that cover the stock calling it a “hold.” A total of 37.9% of analysts have given it “buys,” and 3.4% have given it “sells.” On average, analysts’ 12-month price target for Starbucks stands at $77.64, which implies a potential return of 3.1% from its current price of $75.28.

Peer comparison

Of the 30 analysts tracking McDonald’s (MCD), 76.7% have given it “buy” ratings, while 23.3% have given it “holds.” On average, analysts have given McDonald’s a 12-month price target of $215.0, which implies a potential return of 9.7% from its current price of $196.02.

Of the total 26 analysts that cover Dunkin’ Brands (DNKN) stock, 15.4% have given it “buys,” while 80.8% have given it “holds,” and 3.8% have given it “sells.” On average, analysts have a 12-month price target of $75.65 on DNKN, which implies a potential upside of 3.6% from its current price of $72.99.

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