Could Starbucks Corporation (SBUX) Be In Store For a Different Kind of Price Hike?

Starbucks Corporation (NASDAQ:SBUX) raised its drink prices, and now it might be time for analysts to rethink their price targets

by Josh Selway

Published on Jul 7, 2015 at 11:52 AM
Updated on Jun 24, 2020 at 10:16 AM

Starbucks Corporation (NASDAQ:SBUX) is off 1.4% today at $53.53, amid a broad-market bloodbath. This is out of character for the stock, which has been riding its 20-day moving average (a trendline acting as support again today) higher for most of the year, and touched a record high of $54.75 on June 26. In fact, SBUX has outpaced the S&P 500 Index (SPX) by 14.6 percentage points in the past three months.

Elsewhere, option traders have been betting on even more upside, too, with SBUX's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.79 sitting higher than 87% of readings from the past year. This means call buying has been more popular than what's generally been seen, compared to put buying.

However, not all traders appear to be behind the coffee brewer. During the most recent reporting period, short interest jumped a whopping 23% on SBUX. What's impressive is the stock's ability to maintain its long-term uptrend amid such intense selling pressure.

This isn't the only group that's skeptical of the equity. Analysts, too, have been slow to appreciate the stock's success. SBUX's consensus 12-month price target sits at $55.72 -- only a stone's throw from current trading levels. The shares could be in store for additional gains, should brokerage firms start raising their price targets.

Outside of the Street, Starbucks Corporation (NASDAQ:SBUX) recently made some fundamental changes. The company yesterday announced it would be raising prices on several of its drink products


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