Starbucks is down sharply after earnings but some analysts think guidance was conservative
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Starbucks (NASDAQ:SBUX) opened trading on Wednesday with a swing lower after the company's guidance was seen as disappointing by investors.
The reaction from analysts has been mixed. UBS analyst Dennis Geiger said that while volatility exists in the U.S. and with China macro, a FY23 guidance reiteration is likely prudent. "We think implied 2H targets across China sss, margins, and EPS could prove conservative," he noted.
Cowen also thinks the coffee chain operator came in low with its guidance intentionally. "In our view, SBUX's decision to maintain 2023 EPS & Americas SSS guidance following 2Q's beat reflects a desire to set a low bar for the new CEO & (optimistically) repurchase the remaining ~$12B of stock guided for 2023-25E at more favorable levels," updated analyst Andrew Charles.
BMO Capital Markets analyst Andrew Strelzik said his firm continues to see upside to FY23 for Outperform-rated SBUX continues to believe in the strength of medium-term fundamental outlook.
Evercore ISI also called the guidance from Starbucks (SBUX) conservative ahead of a slower recovery path. Looking ahead, analyst David Palmer boosted the price target on SBUX to $125 and maintained Outperform rating with the bull case still seen as playing out.
Meanwhile, CFRA lowered its rating on Starbucks (SBUX) to Hold from Buy off reduced FY23 EPS estimates. "While SBUX reaffirmed its guidance, a slowdown in China's recovery is expected in 2H 2023. Moreover, SBUX noted a decline in recent average weekly sales growth in China amid uncertainty around the recovery in international travel and consumer behavior," warned analyst Siye Desta.
Shares of Starbucks (SBUX) were down 7.95% at $105.36 at 10:10 a.m.
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