Redburn Atlantic downgraded SBUX to “sell” and lowered its price target to $77
Shares of Starbucks Corp (NASDAQ:SBUX) are 1.1% lower this morning, following a downgrade to “sell” from “neutral.” Specifically, Redburn Atlantic downgraded shares of the coffeehouse chain and lowered its price target from $84 to $77, citing the consensus outlook for the company that does not “adequately reflect” the associated costs.
The Wall Street analyst pointed towards Starbucks’ recently suspended outlook and the fact that same-store sales, net revenue, and income all declined in the fourth quarter. Adding to its argument, Reburn Atlantic cited weekly visits in the U.S., which haven’t grown since 2016.
The underperformance is undeniable; year to date, SBUX is up 2.9%, while the SPDR S&P 500 ETF Trust (SPY) sports a 25.6% gain since the start of 2024. The security briefly rose above $100 earlier this week, but that level is back to acting as pressure.
Despite this poor technical setup, sentiment remains mostly bullish. Of the 28 covering brokerages, 16 recommend a “strong buy” and one says “buy.” This leaves room for more downgrades, which could push the equity below its year-to-date breakeven mark.
Options are attractively priced right now. Starbuck stock’s Schaeffer’s Volatility Index (SVI) of 24% ranks in the relatively low 28th percentile of the past 12 months. What’s more, SBUX’s Schaeffer’s Volatility Scorecard (SVS) also sits at 96 out of 100, meaning it often exceeded options traders’ volatility expectations in the past year.