Starbucks Stock Surge Brewing After Blowout Earnings

Five analysts have already issued price-target hikes on SBUX

by Patrick Martin

Published on Jan 25, 2019 at 9:26 AM

The shares of Starbucks Corporation (NASDAQ:SBUX) are up 4.5% in electronic trading, after the coffee giant's blowout earnings report. Starbucks reported fiscal first-quarter adjusted earnings of 75 cents per share on $6.6 billion in revenue, both soundly exceeding analysts' expectations. Same-store sales also rose 4% year-over-year, more than the 2.8% expected increase. The company said strong sales of its holiday drinks in the U.S. and heavier promotions factored into the upbeat report.

A flurry of bull notes have ensued. Already, five brokerages have hiked their price targets, including RBC to $75 from $74. Many of the analysts were especially encouraged by Starbucks' growth trends seen in both the U.S. and China. 

Starbucks stock is now set to open near its Nov. 8 record high of $68.98. The shares pulled back from that peak in recent months, although the dip was neatly contained by their 80-day moving average. And should today's positive price action pan out, SBUX would be looking at its fifth straight weekly win, its longest streak since late 2015.

Traders looking to speculate on Starbucks stock's price action should consider options. The equity's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 77 out of a possible 100, meaning the stock has handily exceeded options traders' volatility expectations in the past year -- a boon for would-be premium buyers.

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