Starbucks falls as expectations are reeled in due to high-cost backdrop
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Starbucks Corporation (NASDAQ:SBUX) fell in early trading after the company's earnings report threw a bright spotlight on the elevated costs the coffee chain is facing. While Starbucks will raise menu prices this year and reduce some spending to offset higher costs, expectations are being reeled in.
Goldman Sachs cut its rating on Starbucks (SBUX) to Neutral from Buy. The firm is cautious on the recovery track for SBUX given the consistent choppiness in trends, the potential for higher turnover to persist despite wage investments, higher distribution costs and flow-thru implications of consumer behavior normalization. "We view the stockâs upside as limited given the continued cost pressures across the business, potential choppiness in US trends/lapping dynamics, and a still-unclear recovery in China," warned analyst Jared Garber.
Cowen sliced its price target on SBUX down to $115 from $125, but kept a positive stance. "We commend the multi-year EBIT margin guidance that includes a return to long term 18%-19% in 2024, suggesting 18.4% consensus is safe," noted analyst Andrew Charles.
Elsewhere on Wall Street, Jefferies lowered its price target to $130 from $142, Morgan Stanley clipped its price target to $107 from $115 and Piper Sandler dropped its PT to $100 from $108.
Shares of Starbucks (SBUX) fell 2.85% premarket to $95.95 following the profit miss.