So coffee giant Starbucks (SBUX) has been in the midst of a turnaround for some time now. By some reports, at least elements of it are working. Others are perhaps not working so well, and that in turn led to an analyst cutting the price target on Starbucks shares back. That proved to be bad news for investors, and Starbucks shares plunged over 3% in Monday afternoon’s trading.
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Citi analyst Jon Tower, who has nearly a five-star rating on TipRanks, kept his Neutral rating in place, but cut the price target rather slightly, dropping it to $92 per share from its previous $94 per share. Basically, Tower’s remarks reflect the opening paragraph of this piece, noting that some elements of Starbucks’ recovery seem to be doing well, while others fare worse. That combination leaves uncertainty, with reports noting that “…questions still remain….”
Brian Niccol’s conference call suggested a much brighter picture, though, with Starbucks making “steady progress” on its Back to Starbucks plan. With global revenue and comparable store sales both improved, though, there are signs that this might be more than corporate optimism. The uncertainty, though, is hurting Starbucks.
Now With…Air?
South Korean Starbucks locations took an unexpected step forward recently as they released plans to roll out the Aerocano, an Americano-style coffee beverage infused with, of all things, air. South Korean Starbucks locations are seeing a strong demand for iced coffee year-round, and the Aerocano is designed to offer a new choice in the field.
Reports note that the aeration process will offer “…a velvety foam while softening the espresso’s bitterness and body.” It is considered to have a “lighter flavor profile,” and be geared toward customers who want an alternative to iced Americanos.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 13.87% loss in its share price over the past year, the average SBUX price target of $100.59 per share implies 6.72% upside potential.
