Starbucks dips after Citi pulls buy rating on the coffee chain stock
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Citi downgraded Starbucks (NASDAQ:SBUX) on Tuesday to a Neutral rating after having the coffee chain stock slotted at Buy.
Analyst Jon Tower and team think the recent management transition at Starbucks (SBUX) on top of the U.S. labor shifts pose potential risks to earnings for several years.
"In addition to broader inflation pressures/risks, management changes/unionization pushes could be tied to additional partner investments, and new ESG initiatives on the horizon present additional unknowns for forward looking estimates. Omicron and China lockdowns are likely to limit NT positive surprises, and it feels appropriate for shares to be trading near lows relative to the S&P 500."
In China, recent lockdown actions by the government in Shanghai have raised the risk of Q1 earnings coming in lighter than anticipated for SBUX in the region.
Citi reduced its price target on Starbucks (SBUX) to $91 per share from $120.
Shares of Starbucks (SBUX) fell 0.89% premarket to $79.97.
Read more about the union wildcard at Starbucks.