NEW YORK (TheStreet) — Shares of Starbucks (SBUX – Get Report) are up 0.85% to $96.65 in pre-market trading Thursday, after the coffee chain had its price target raised to $107 from $99 by analysts at Goldman Sachs this morning.
The firm maintained its “buy” rating, and said it believes mobile ordering is a significant growth driver and investors appear dismissive of the opportunity.
Goldman analysts think Starbucks shares can move up despite the recent run, and sees upside to the 2015 and 2016 consensus estimates.
The firm also noted the falling coffee prices, as well as positive lunch data-points.
Seattle, WA-based Starbucks is a roaster, marketer and retailer of specialty coffee in the world, operating in 62 countries, selling a variety of coffee and tea products.
Insight from TheStreet’s Research Team:
Michael Khouw commented on Starbucks in a recent post on ActionAlertsOPTIONS.com. Here is what Khouw had to say about the stock:
Starbucks (SBUX) has been one of the exceptional growth stocks of the past decade. That strength has continued in 2015, and it’s up over 14% year to date as I write this.
Having grown EPS at about 25% over the past 12 months, the stock isn’t expensive at just over 27x the next 12-month earnings estimates, but we could reasonably describe it as fully valued.
That said, SBUX is essentially trading at the Action Alerts PLUS price target of $94. If that is our target price for the stock, we might be comfortable selling it at a price higher than that. Or perhaps we can get paid for the chance that we might be compelled to sell our shares above our target price?
By selling the April $95 strike call against 100 shares, we will collect $145 in premium. If the stock stays below $95, that premium is ours to keep. If the stock rises above $95 by expiration 30 days away, we may have to sell our shares at the $95 strike price; however, that would still represent a total profit of approximately 2.8%.
This is not a trade we would consider if our target price was substantially higher than the current level, but makes sense given we view Starbucks as fully valued here.
Want more information like this from Michael Khouw and TheStreet Research Team BEFORE your stock moves? Learn more about ActionAlertsOPTIONS.com now.
Separately, TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
“We rate STARBUCKS CORP (SBUX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company’s strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.” You can view the full analysis from the report here: SBUX Ratings Report
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