The notion of a new drink at coffee giant Starbucks (NASDAQ:SBUX) may spark a yawn here and there, but this is a little something different. In fact, it’s something very different, and that difference may be why Starbucks shares are up fractionally in Monday afternoon’s trading. This time around, the new beverage, dubbed Oleato, comes equipped with one very unusual ingredient: olive oil.
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Given that “oleato” actually translates as “with oil,” the new drink’s design is oddly on the nose. Customers will have their choice of either a latte or an iced espresso—maybe a bit of a stretch given that it’s winter, but not out of line with warmer weather on the way—as well as an add-on known as Oelato Golden Foam, which is comprised of Partanna extra virgin olive oil and vanilla sweet cream that can be added to any drink. However, there are four specific options that are particularly recommended, and those will be included in the app.
Frantically Innovating, But to What End?
Given that Starbucks already tried Oleato once—to less than stellar results, according to the New Yorker, which declared it “…like a large spoonful of olive oil in coffee”—it’s surprising to see it go into wide use. But then, this is the same chain that’s rolling out new mugs for virtually every holiday now; it’s set to offer up a suite of Valentine’s Day refillables, complete with a heart-shaped straw topper. Starbucks also has to deal with some less-than-helpful optics after firing an employee who got pistol-whipped on his store’s behalf, trying to prevent a robbery in progress. Worse, the company wouldn’t actually say why the employee was fired, further clouding an already unsavory picture.
Is Starbucks a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on seven Buys and 11 Holds assigned in the past three months, as indicated by the graphic below. After a 12.25% loss in its share price over the past year, the average SBUX price target of $107.59 per share implies 15.39% upside potential.
