Why Starbucks Corporation Shares Could Spike Another 15%

Before you go, we thought you'd like these...
Before you go close icon

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Starbucks Corporation gained 2% today after UBS upgraded the specialty coffee giant from neutral to buy.

So what: Along with the upgrade, analysts Keith Siegner and Dennis Geiger boosted their price target to $87 (from $80), representing about 16% worth of upside to yesterday's close. So while momentum traders might be turned off by Starbucks' year-to-date price weakness, UBS' call could reflect a sense on Wall Street that its growth prospects -- particularly overseas -- are becoming too cheap to pass up.

Now what: UBS raised its 2014 EPS estimate for Starbucks from $2.67 to $3.16 and its 2015 view from $2.65 and $3.11. "[Starbucks'] unique multifaceted consumer products company model carries near best-in-class Americas comp performance, a meaningful and expanding international presence, burgeoning CPG opportunity, and optionality around several top line sales layers, including potentially yet to be announced initiatives," said UBS. "Combined with a strong management team which should continue to provide an innovative strategic direction and solid execution, and it's easy to envision high teens EPS growth over the long-term." When you couple that upbeat outlook with Starbucks' still-reasonable forward P/E in the mid-20s, it's tough to disagree with UBS' upgrade. 

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

The article Why Starbucks Corporation Shares Could Spike Another 15% originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading