Starbucks (NASDAQ:SBUX) rolled out its earnings yesterday, and the news was reasonably good. Both top and bottom line beats were present, if a bit narrow, but investors weren’t happy. Sufficiently unhappy, in fact, to send Starbucks slumping over 9% at the time of writing. There’s hope, however, from some analysts who think the newest guidance might be a bit conservative.
One of the leading voices on that front was Dennis Geiger, a UBS analyst who suggested that the targets Starbucks set forth for margins, earnings per share, and more could ultimately prove to be a bit of a cakewalk. Cowen & Co. analyst Andrew Charles also rang in on the topic, noting that Starbucks’ call to keep EPS and guidance manageable was likely a move to “…set a low bar for the new CEO” as well as put itself in a good position to repurchase stock at lower prices.
Not that Starbucks doesn’t have its share of issues. That new CEO recently went Undercover Boss-ing his way around several stores, and discovered there are over 1,500 cup and lid combinations. That’s a potential savings point once they can standardize a bit. Further, Starbucks has a plan going forward to charge customers for no ice in their Starbucks Refresher drinks. A Starbucks barista let spill that the cost of not putting ice in a drink will soon be $1 extra. Starbucks officials denied this report, but the idea of it was enough to leave some customers in a funk.
The upheaval is sufficient to leave analysts split. With eight Buy recommendations and 10 Holds, Starbucks stock is considered a Moderate Buy by analyst consensus. Further, with an average price target of $113.93, it comes with 9.31% upside potential.
