Starbucks Q1 Earnings Analysis Starbucks Faces Gloomy Sentiment Ahead of Q1 Earnings Report

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By Ronald Tech

Starbucks Corp SBUX heads closer to reporting its first quarter earnings on Jan. 30 after market hours, and analysts have begun assessing the company to update their investment stance.

Over the past year, Starbucks stock has witnessed a sharp decline of over 10%, which is largely attributed to inflationary pressures experienced in most of 2023.

Technical indicators reflect mixed sentiments toward Starbucks’ stock. While the 50-day SMA has been edging towards the 200-day SMA, a bullish crossover is yet to materialize. The on-balance volume (OBV) indicator has been trending downward, reflecting negative volume pressure that can foreshadow lower prices.

Piper Sandler analyst Brian Mullan gave a Neutral rating to the stock and reduced his price target from $107 to $100 a share, citing potential near-term challenges despite a favorable valuation compared to historical trends.

As Starbucks prepares to announce its first quarter fiscal year 2024 earnings, there are concerns about adjusted EPS guidance for fiscal 2024 and same-store sales (SSS) potentially falling short of consensus. Analysts’ hesitations also stem from worries about U.S. consumer behavior, restaurant industry traffic, and uncertainties surrounding Starbucks’ China business.

Mullan acknowledged positive risk-reward dynamics and relative value but expressed reservations about absolute upside potential. He mentioned that even if one were to ‘haircut’ consensus adjusted EPS for 2025, the stock is trading at ~20x forward earnings, which he regarded as too cheap for a business of this caliber.

At the time of publication, Starbucks stock was trading up 0.080% at $93.42, within a 52-week range of $89.21 and $115.48.

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