Starbucks Analyst Gives 'Likeliest' Reason For Steep Sales Collapse, Rarely Seen 'Outside Economy-Wide Crises'
Portfolio Pulse from Priya Nigam
Starbucks Corp (NASDAQ:SBUX) is experiencing a significant sales decline, with a deceleration pace in same-store sales rarely seen outside major economic crises, according to BofA Securities. Analyst Sara Senatore maintains a Buy rating on Starbucks, with a price target of $108, despite the sales slump. The decline is attributed to a social media narrative around Starbucks' position on the Middle East, rather than consumer check fatigue or pricing issues, as Starbucks' pricing remains competitive. The company's Net Promoter Score has also dropped sharply from October to November 2023.
May 06, 2024 | 4:02 pm
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NEGATIVE IMPACT
Starbucks is facing a steep sales decline attributed to a negative social media narrative, despite maintaining competitive pricing and a Buy rating from BofA Securities with a $108 price target.
The steep sales decline, especially in the context of a competitive pricing strategy and a strong historical performance, suggests that external factors such as social media narratives can have a significant impact on consumer behavior. Given the analyst's maintained Buy rating and unchanged price target, the market's reaction may be mixed, but the immediate sales impact and the sharp drop in the Net Promoter Score indicate a negative short-term outlook for SBUX's stock price.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100