Oppenheimer Stays Bullish on Starbucks; Still “Top Large Cap Pick” (SBUX)

Coffee retailer Starbucks Corporation (SBUX) on Thursday caught some continued bullish support from analysts at Oppenheimer.

The firm reiterated its “Outperform” rating on SBUX as well as its $62 price target, which suggests a 24% upside to the stock’s Wednesday closing price of $49.80.

An Oppenheimer analyst commented, “SBUX has rebounded 15% since 8/2′s bottom, but remains well-positioned for new capital and we reiterate our ‘top large-cap pick’ thesis. Near term, expectations have reset to healthy and beatable levels with potential upside if management sharpens focus on costs as comps remain in healthy ~5%+. Longer term, SBUX is entering 24 months of coffee cost benefits with F14 likely to be a major ‘flow-through year,’ all while a stuffed sales pipeline methodically unloads (Verismo, enhanced food, throughput, CPG, China, etc). Shares appear attractively valued at 1.0x PEG, given our expectation for 23% average EPS growth over F13 and F14.”

Starbucks shares rose 50 cents, or +1%, in premarket trading Thursday.

The Bottom Line
Shares of Starbucks (SBUX) have a 1.37% dividend yield, based on last night’s closing stock price of $49.80. The stock has technical support in the $45 price area. If the shares can firm up, we see overhead resistance around the $52-$53 price levels.

Starbucks Corporation (SBUX) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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