Starbucks Q2 Earnings Fall Short of Expectations, Analyst Lowers Price Target

Piper Sandler's Brian Mullan lowered their price target on Starbucks (NASDAQ: SBUX) by 3.4% from $88 to $85 on 2024/05/06. The analyst maintained their Hold rating on the stock.

Starbucks recently reported its Q1 2024 earnings, which were characterized by Mullan as a "particularly disappointing set of results and guidance." The coffee giant's Q2 2024 earnings fell short of expectations, with earnings per share (EPS) of $0.68 missing the Zacks Consensus Estimate of $0.79 and last year's Q2 EPS of $0.74 by 8.1%. Revenue for the quarter came in at $8.56 billion, also falling short of estimates.

In response to the underwhelming results, Starbucks CEO Laxman Narasimhan acknowledged the challenges faced by the company but expressed confidence in their long-term prospects. Narasimhan stated, "We have a clear plan to execute, and the entire organization is mobilized around it. We are very confident in the long term and know that our Triple Shot Reinvention with Two Pumps strategy will deliver on the limitless potential of this brand."

While Starbucks did not provide financial guidance for the upcoming quarters, analysts have a consensus forecast of $3.96 EPS for the next year. If the analysts' predictions hold true, this would represent an 8.4% increase in EPS on a year-over-year basis.

The current analyst rating on Starbucks is relatively balanced, with 41.2% of top-rated analysts considering it a Strong Buy or Buy, while 58.8% view it as a Hold. No analysts recommend or strongly recommend selling the stock.

Since Starbucks' latest quarterly report on April 30, 2024, the stock price has declined by 17.6%. Year-over-year, the stock has fallen by 32%. During this period, Starbucks has trailed the performance of the S&P 500, which is down 25.2%.

Highlighting the credibility of Piper Sandler analyst Brian Mullan, WallStreetZen ranks Mullan in the top 5% of Wall Street analysts, with an average return of 21.8% and a 75.4% win rate. Mullan specializes in the Communication Services, Consumer Cyclical, and Consumer Defensive sectors.

Starbucks Corporation, a global roaster, marketer, and retailer of specialty coffee, operates through three segments: North America, International, and Channel Development. The company offers a range of coffee and tea beverages, as well as food products, under various brand names. As of October 3, 2021, Starbucks operated thousands of company-operated and licensed stores worldwide.

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