Same-Store Sales, Revenue Miss Sends Starbucks Stock Lower

No fewer than 11 analysts lowered their price targets

Deputy Editor
Oct 29, 2021 at 11:04 AM
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The shares of Starbucks Corporation (NASDAQ:SBUX) are off 7.1% at $105.24 at last glance, following the coffee chain's fiscal fourth-quarter earnings report. The firm's earnings of $1 per share just barely topped analysts' expectations, while its revenue and same-store sales missed estimates. Starbucks also predicted that its fiscal 2022 operating margin to come in at 17%, which is lower than its long-term target, citing inflation and major investments in its stores. It did add, however, that these investments will help push its operating margin back up to its ongoing target of 18% to 19% by fiscal 2023. 

Analysts aren't so sure. No less than 11 analysts cut their price targets, including Stifel, which slashed its outlook to "hold" from "buy," and lowered its price target to $112 from $130. BTIG, meanwhile, said it doesn't expect SBUX to recover all its lost margins for several years. 

Heading into today, the majority of analysts held bullish positions. Of the 24 in coverage, seven said "hold," while the other 17 said "buy" or better. Plus, the 12-month consensus price target of $123.44 is a 17.3% premium to current levels. 

Starbucks stock opened at a seven-month low right out of the gate, thanks to today's lukewarm report and negative analyst attention. The 320-day moving average has, so far, contained these losses, though the stock breached its year-to-date breakeven and now sports a 1.7% deficit in 2021. 

Options traders took a more bearish stance ahead of SBUX's earnings event. This is per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.28, which stands higher than 76% of readings from the past year. This implies short-term options traders have rarely been more put-biased. 

Drilling down to today's options activity, 87,000 calls and 56,000 puts have been exchanged so far, which is nine times the intraday average. The two most popular positions are the January 2022 140-strike call, and the weekly 11/5 105-strike put, with positions being bought to open at the latter. 

 

 

 

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