Starbucks (SBUX) stock is trading higher Wednesday after the world's largest coffee chain reported mixed earnings results for its fiscal third quarter and reiterated its full-year outlook.
In the quarter ended June 30, Starbucks said its revenue decreased 0.6% year–over-year to $9.1 billion, pressured by a 3% decline in global comparable-store sales. Its earnings per share (EPS) were down 6.1% from the year-ago period to 93 cents.
"Our efficiency efforts, which are tracking ahead of expectations, partially offset investments associated with the cautious consumer environment," Starbucks Chief Financial Officer Rachel Ruggeri said in a statement. "Collectively, our disciplined approach enables us to preserve both balance sheet strength and flexibility, positioning us to successfully navigate through the current macroeconomic environment."
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Starbucks' top-line results fell short of the $9.2 billion in revenue Wall Street was expecting, while earnings came in higher than the 93 cents per share analysts' forecast, according to CNBC.
On its conference call, Starbucks reiterated the full-year outlook it provided in the second quarter, which calls for revenue to grow in the low single-digit percentage and earnings-per-share growth in a range of flat to low single-digit percentage.
While William Blair analyst Sharon Zackfia believes fiscal 2024 guidance is meetable, the company's third-quarter results "did little to increase visibility on how quickly revenue and profit growth will reignite." The analyst adds that it's likely that fiscal year 2025 financials will "fall below the company's algorithmic growth target of 5%-plus comparisons yielding 15%-plus EPS growth, in our opinion."
Is Starbucks stock a buy, sell or hold?
Starbucks has struggled on the price charts this year, down more than 18%. And Wall Street is on the sidelines when it comes to consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for SBUX stock is $87.18, representing an upside of more than 10% to current levels. Despite the upside potential, the consensus recommendation is a Buy, but with very low conviction.
William Blair's Zackfia has a Market Perform (equivalent of a Hold) rating on the large-cap stock. The analyst reiterated her rating after earnings, calling "conviction in our out-year estimate shaky."
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