Starbuck’s stock is trading at about $36, which is almost exactly where it was six months ago. The stock traded under $10 five years ago, so it really acted like a growth stock until recently.
The primary reason that the share price of a growth stock does not grow is that the market is concerned about the growth.
UBS just upgraded SBUX with a price target of $42. It said the company’s shares were undervalued. The company says it is gaining ground in China. And, even with revenue up 20% in the last quarter to $2 billion, and positive remarks from analysts, Wall St. is worried about the future.
The company has said that most of its growth is ahead of it. Starbucks has about 12,000 stores worldwide and believes that it will eventually have 40,000. But the company also said that margins are flattening, and investors just can’t seem to accept that.
Thre is actually no reason to think Starbucks will head up anytime soon unless it can show that its guidance was too conservative.
Douglas A. McIntyre can be reached at [email protected]. He does own securities in companies that he writes about.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.