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Valued at a market cap of $112.4 billion, Starbucks Corporation (SBUX) is a roaster, marketer, and retailer of coffee. The Seattle, Washington-based company generates revenue through its retail coffeehouses, which offer handcrafted beverages and food.
This coffee retailer has underperformed the broader market over the past 52 weeks. Shares of SBUX have gained 16.8% over this time frame, while the broader S&P 500 Index ($SPX) has soared 29.8%. However, on a YTD basis, the stock is up 16.3%, outpacing SPX’s 4.8% rise.
Narrowing the focus, SBUX has also lagged the State Street Consumer Discretionary Select Sector SPDR ETF’s (XLY) 19.3% uptick over the past 52 weeks. Nonetheless, it has notably outperformed XLY’s 1.3% YTD drop.
On Apr. 17, SBUX shares rose 1.7% after Iran announced it would reopen the Strait of Hormuz. The move led to a sharp decline in crude oil prices, signaling potential relief from inflationary pressures on operating margins.
For the restaurant industry, lower oil prices reduce delivery and supply chain costs. Additionally, declining fuel prices at the pump effectively increase consumers’ disposable income, supporting higher foot traffic across both casual and fine dining establishments.
Among the 38 analysts covering the stock, the consensus rating is a "Moderate Buy,” which is based on 15 “Strong Buy,” two “Moderate Buy,” 16 “Hold,” two “Moderate Sell,” and three “Strong Sell” ratings.
The configuration is slightly less bullish than two months ago, with 16 analysts suggesting a "Strong Buy” rating.
On Apr. 24, Bank of America Corporation (BAC) analyst Sara Senatore maintained a “Buy” on SBUX and raised its price target to $130, the Street-high price target, indicating a 32.8% potential upside from the current levels.
The mean price target of $100.36 indicates a 2.5% potential upside from the current levels.
