SBUX Posts Earnings Beat, Brings in Bull Notes

The security is up nearly 30% in the past six months

Digital Content Manager
Jan 27, 2021 at 10:56 AM
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Starbucks Corporation (NASDAQ:SBUX) just stepped into the earnings confessional to report fiscal first-quarter earnings of 61 cents per share -- higher than analysts' estimates of 55 cents per share. However, the coffee giant also posted a revenue miss due to a 5% drop in same-store sales, as coronavirus cases rose and forced customers to shelter at home. Separately, Chief Operating Officer (COO) Rosalind Brewer announced that she will be leaving the company to replace Walgreens Boots Alliance's (WBA) CEO Stefano Pessina. 

Nonetheless, the equity received no less than eight price-target hikes this morning, including one from Citigroup to $119 from $111. Some broad-market headwinds may be keeping Starbucks stock in check, though, as the shares were last seen down roughly 5% at $99.43. 

Digging deeper, the security has nearly doubled off its March 18, two-year low of $50.02, and touched an all-time high of $107.75 earlier this month. And while shares have cooled off slightly from that peak, the ascending 70-day moving average continues to provide support, and has contained several other pullbacks since August. Over the past six months, SBUX has added 30%.

Analysts were mostly pessimistic towards Starbucks stock coming into today, with 11 of the 20 in coverage carrying a tepid "hold" rating, while nine called it a "buy" or better. Meanwhile, the 12-month consensus target price of $107.92 is a 7.1% premium to current levels. 

Options traders, meanwhile, are a bit more optimistic. So far today, 41,000 calls and 19,000 puts have crossed the tape -- four times the intraday average. Most popular is the weekly 2/5 110-strike call, followed by the 108-strike call in the same series. 

It looks like there's still room to take advantage of SBUX's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 34% sits in the relatively low 16th percentile of its annual range, indicating options players are pricing in low volatility expectations at the moment

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