SBUX could enjoy more analyst-induced tailwinds
An analyst at Jefferies weighed in on what he refers to as the "third wave" of coffee shops, or those artisan local cafes, and their effect on Starbucks Corporation (NASDAQ:SBUX). The brokerage firm believes SBUX can effectively compete because of its scale and technology infrastructure, even if it's not as "hip" as these newer coffee shops. The analyst note also cited the company's push to suburban areas as a reason Jefferies raised its fiscal year 2019 same-store sales estimates, and moved its price target up to $89 from $76.
More analysts may need to follow Jefferies' lead, because Starbucks stock has been putting distance between its price and the consensus analyst price target of $72.50. In fact, SBUX shares just hit an all-time high of $76.95 last week, and were last seen trading at $75.54. Should bullish analyst notes keep rolling in, the equity will likely add to its almost 17% year-to-date lead.
A quick exit from short sellers could also propel the security further up the charts, since short interest increased almost 37% in just the past reporting period. More than four days' worth of buying power is now held by short sellers, enough to potentially fuel a short-covering rally for SBUX stock.