Starbucks (SBUX – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Alison Fok from DBS maintained a Hold rating on the stock and has a $98.00 price target.
Alison Fok’s rating is based on the analysis of Starbucks’ strategic initiatives and market challenges. The company’s commitment to expanding its presence in China is a key growth driver, aiming to open a new store every nine hours, targeting 9,000 stores by 2025. Despite the impressive growth in comparable sales in China and ambitious expansion plans, Starbucks faces macroeconomic headwinds and stiff competition from local coffee and tea chains, which may put pressure on its profitability in the medium term. This balance of strong growth prospects with underlying risks contributes to the Hold rating.
Additionally, efforts to rejuvenate store productivity in the US, Starbucks’ largest market, are underway with product mix enhancements and new equipment introductions. The company’s partnership with delivery services and significant growth in digital membership showcase potential for sales growth. However, labor pressures and competition may limit margin expansion. The Hold rating, accompanied by a target price of $98 per share, reflects these factors, along with Starbucks’ premium valuation relative to its peers, indicating potential downside risks in the face of industry headwinds.
In another report released yesterday, Citi also maintained a Hold rating on the stock with a $85.00 price target.
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Starbucks (SBUX) Company Description:
Founded in 1985, Starbucks Corp. is a Washington-based roaster and retailer of specialty coffee, with over 30,000 stores in 80 markets. It operates through three segments, including Americas, International and Channel Development. Starbucks stores offer coffee and tea beverages, roasted whole bean and ground coffees, single-serve and ready-to-drink beverages, food items such as pastries, sandwiches, salads, oatmeals, as well as a variety of merchandise. The company’s leading brands include Evolution Fresh, Teavana, Tazo Tea and Seattle’s Best.
Read More on SBUX:
- SBUX Earnings: Q2 Miss and Guidance Cut Hurt Stock
- Starbucks cuts FY24 EPS view to ‘flat to up low single digits’ from up 15%-20%
- Starbucks says working to address overnight and weekend demand potential
- Starbucks CEO sees ‘three execution opportunities’ in U.S. business
- Starbucks says still see effects of slower than expected recovery in China
