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Starbucks cut its sales-growth forecast on Wednesday to 1% from 3%.
Shares plunged 8% on the news.
Morgan Stanley downgraded the stock, slashing its price target to $59 from $72.
Starbucks on Tuesday low ered its third-quarter same-store-sales growth forecast to 1% from its precious estimate of 3%-5%, sending shares plunging 8%. The coffee giant also said it would close roughly 150 underperforming US stores.
While many sell-side research departments remain optimistic, Morgan Stanley took the opportunity to downgrade Starbucks, citing a "clearly decelerating top-line."
"Starbucks' 3Q pre-announcement on disappointing sales in both the US and now China are compelling enough to lower our investment rating to EW from OW, especially in light of continued uncertainty in the FY19 EPS outlook and time to recover sales," analyst John Glass said in a note to clients.
"In addition to cutting our EPS estimates for this year and next, we have downwardly adjusted our base case multiple (25x to 22x) to reflect lower anticipated EPS growth over at least the next year."
Same-store sales are particularly important for companies like Starbucks that have accumulated a vast retail footprint. Some analysts are worried that the chain may have reached full penetration in the US , making comparable sales all the more important to its continued growth.
Morgan Stanley's new price target of $59 is now below Wall Street's average target price of $61.72, according to data from Bloomberg, but still 15% above where shares were trading Wednesday.
Elsewhere on Wall Street, the stalling sales were seen as "one step back, two steps forward," UBS said.
"Despite the reductions, SBUX articulated plans & urgency to accelerate growth through tangible sales drivers & streamlined ops, while keeping LT guidance unchanged," analyst Dennis Geiger said in a note to clients.
"We expect shares to be down modestly today, w/ support from: a US sss acceleration to 3% in June, low expectations that likely already embedded a guidance reduction, and potential that comps bottomed & could reaccelerate in FY19."
Starbucks cut its sales-growth forecast on Wednesday to 1% from 3%.
Shares plunged 8% on the news.
Morgan Stanley downgraded the stock, slashing its price target to $59 from $72.
Starbucks on Tuesday low ered its third-quarter same-store-sales growth forecast to 1% from its precious estimate of 3%-5%, sending shares plunging 8%. The coffee giant also said it would close roughly 150 underperforming US stores.
While many sell-side research departments remain optimistic, Morgan Stanley took the opportunity to downgrade Starbucks, citing a "clearly decelerating top-line."
"Starbucks' 3Q pre-announcement on disappointing sales in both the US and now China are compelling enough to lower our investment rating to EW from OW, especially in light of continued uncertainty in the FY19 EPS outlook and time to recover sales," analyst John Glass said in a note to clients.
"In addition to cutting our EPS estimates for this year and next, we have downwardly adjusted our base case multiple (25x to 22x) to reflect lower anticipated EPS growth over at least the next year."
Same-store sales are particularly important for companies like Starbucks that have accumulated a vast retail footprint. Some analysts are worried that the chain may have reached full penetration in the US , making comparable sales all the more important to its continued growth.
Morgan Stanley's new price target of $59 is now below Wall Street's average target price of $61.72, according to data from Bloomberg, but still 15% above where shares were trading Wednesday.
Elsewhere on Wall Street, the stalling sales were seen as "one step back, two steps forward," UBS said.
"Despite the reductions, SBUX articulated plans & urgency to accelerate growth through tangible sales drivers & streamlined ops, while keeping LT guidance unchanged," analyst Dennis Geiger said in a note to clients.
"We expect shares to be down modestly today, w/ support from: a US sss acceleration to 3% in June, low expectations that likely already embedded a guidance reduction, and potential that comps bottomed & could reaccelerate in FY19."
It's about time. Their coffee is disgusting and loaded with GMOs. Overpriced garbage. The same is true of their food. Overpriced and loaded with preservatives and GMOs. You would think with all of the educated consumers out here that they would know that their coffee nor their food is healthy with all of the crap that's in it and they don't plan on changing any of that either.
Many coffee shops now source organic coffee and organic milk. For example, Joe Coffee usually uses Organic Valley milk, which is very good quality and GMO free, therefore I don't mind spending $4.10 + $1 tip for a cortado.
Fake news, Starbucks just hit a plateau that's all. There's one at every street corner in NYC. People young and old drink it and there's no new customers to add what can they do? Wall street wants dead people to be new customers.
It's about time. Their coffee is disgusting and loaded with GMOs. Overpriced garbage. The same is true of their food. Overpriced and loaded with preservatives and GMOs. You would think with all of the educated consumers out here that they would know that their coffee nor their food is healthy with all of the crap that's in it and they don't plan on changing any of that either.
Many coffee shops now source organic coffee and organic milk. For example, Joe Coffee usually uses Organic Valley milk, which is very good quality and GMO free, therefore I don't mind spending $4.10 + $1 tip for a cortado.
You're a bit of a clown about GMO. You are a GMO, everything is GMO. There is nothing present today that has the same genome from 1 million years back.
Its overwrought hysterical nonsense. Especially the health notions - a bunch of crap. Of course the milk is GMO-free. The only O in Milk is cow bacteria. Even if the cows were somehow GM their bacteria aren't. You barely even know what GMO is apparently. And even then - if you consumed a GMO so what? The thing different about a GMO is that its DNA has been altered. Its still DNA tho. Do you think the DNA for green and leafy when you eat a lettuce leaf is somehow harmful? Do you think the DNA that encodes fish fins will make you grow fish fins if you eat fish? The GMO hysteria is as dumb as the gluten hysteria in non-celiacs.
Organic on the other hand - may or may not be more healthy than non-organic, depends on the situation - the particular pesticides or other synthetic chemical involved in the production of the non-organic form vs organic. Organic is an actual possible health difference. GMO is bollox.
I remember starving after having arrived at LAX airport from a long 7 hour delayed flight from NYC, and seeing Starbucks first - right out of the airplane. Well, because I was starving half to death, I went in to see what I can temporarily eat to tie me over for a long drive back up to Bakersfield, and not even! I went in and right back out - nothing appealed to me - not even while STARVED out! The stench of their coffee alone is disgusting.
When the growth rate to zero or below, I will throw a party. You are all invited.
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