What Do Wall Street Analysts Think After Starbucks Investor Day?

Starbucks Corporation (NASDAQ: SBUX) shared updates on its present growth model and a peek into its future outlook in 2021 to appreciate shareholder value in its Investor Day event on Wednesday.

What Do Wall Street Analysts Say?: Newton Advisors LLC President and Founder, Mark Newton, sees Starbucks as a good avenue for a short-term investment but is skeptical about the mid-to-long-term prospects. 

CNBC quoted Newton saying, “The stock does have a lot of near-term momentum. That is certainly a good thing. However, when looking out three to six months or longer, I don’t view the stock as really all that attractive of a risk-reward at this level.”

On a technical basis, Newton believes that although Starbucks is overbought, it still holds a 10% upside potential with a price target of $110.

Federated Hermes Inc (NYSE: FHI) anticipates Starbucks to perform well next year. Analyst Steve Chiavarone, in CNBC’s Trading Nation, said that he expects consumer demand to stir the coffeehouse chain’s revenue growth. A vaccine cure and lifting of travel restrictions worldwide are the primary factors that would encourage consumer spending. 

Chiavarone’s predictions assume that next year’s dine-in locations would fare better than eat-at-home options, and Starbucks chains could benefit from the changing customer expectations.

Key Highlights: Starting 2023, Starbucks predicts a continual annual revenue growth rate in the range of 8% to 10% and a non-GAAP operating income margin between 18% to 19%.

The coffee chain expects net new locations to grow 6% starting 2022. China would contribute substantially to this area, with a domestic new unit growth rate in the range of 10% to 13%.

The new store growth rate in the U.S. was toned down to 3%, from the earlier range of 3% to 4%.

Price Action: SBUX shares are up 4.1% at $104.49 in the pre-market session on the last check Thursday.

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