Wednesday, October 20, 2021

Can Starbucks Stock Heat up Again?

Must read

Stock Markets13 minutes ago (Sep 24, 2021 04:00PM ET)

(C) Reuters. Can Starbucks Stock Heat up Again?

Starbucks (NASDAQ:SBUX) stock has been under considerable pressure lately.

This comes courtesy of an update from Yum China (YUMC), which pointed to renewed COVID-19 Delta variant fears that could cause profits to fall 50% to 60%. YUMC stock tumbled nearly 6% on the news.

Undoubtedly, China has been a major source of growth for Starbucks, the Seattle-based coffee chain.

Still, Starbucks has made it through COVID-19 headwinds before, and it will likely heat up again after it passes through another wave of headwinds.

Given Starbucks’ momentum prior to the bad news, and the likelihood that the Delta-induced impact is now baked into the share price, I remain bullish on SBUX stock, as shares flirt with a correction. (See SBUX stock charts on TipRanks)

Longer-Term Fundamentals

The latest update from Yum China doesn’t bode well for Starbucks, as it looks to cap off the year.

Regardless, the long-term thesis on China remains intact. Starbucks is positioned to become a dominant force in China for many years, if not decades, to come as it benefits from the nation’s rapidly-rising middle class.

This is a secular tailwind that takes many years to play out, and near-term headwinds are unlikely to derail it.

Wall Street’s Take

According to TipRanks’ consensus analyst rating, SBUX stock comes in as a Moderate Buy. Out of 17 analyst ratings, there are 12 Buy recommendations, and five Hold recommendations.

The average SBUX price target is $132.14. Analyst price targets range from a low of $108 per share, to a high of $145 per share.

Bottom Line

A majority of analysts remain bullish on SBUX stock. This could change, as analysts factor in a China slowdown into the equation.

Over the coming weeks, expect some analysts to follow in the footsteps of YUMC analysts, with a downgrade on Buy ratings, price targets, or both.

Such downgrades could further pressure the stock, and provide a compelling entry point for long-term thinkers who want to profit from longer-term tailwinds.

Disclosure: Joey Frenette owned shares of Starbucks at the time of publication.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Can Starbucks Stock Heat up Again?

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Latest article

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.