After a long period of downward movement caused by the closure of a large number of coffee houses in China, Starbucks ‘ stock price (SBUX) is slowly recovering. Many investors are wondering if it is a buy.
Based on the financials and technicals, Starbucks stock is strong buy. However, investors should look at the stock’s critical levels before entering a trade.
Starbucks recently published a comprehensive income statement for 2019 in which global sales increased by 5%, due to an increase in the average check by 3%. Sales in America grew by 6%, and international sales – by 1%.
Despite the situation with coronavirus, sales in China increased by 3%, but this indicator will be adjusted in the first quarter of 2020. Net revenue was $7.1 billion, up 7% from last year.
The good news is that sales levels are recovering. Quarantine in China is gradually decreasing, allowing closed establishments to switch to a short work schedule, which helps the Starbucks’ stock levels positions to return to its previous values.
Stock Market Today
Today, the US dollar is strengthening against the euro but is weakening against the yen and the pound. In the absence of significant economic releases, investors are once again focused on the negative impact of the Chinese coronavirus on the economy.
The dollar is pressured by Apple’s statement that it does not expect the quarterly profit plan to be completed due to an overall reduction in global shipments of the iPhone and a decrease in demand for the company’s products in China due to the epidemic. Currently, the company produces most of its products in China, and now it is forced to temporarily stop the work of factories, as well as close some stores. Moody’s also reported today a likely slowdown in economic growth in Asia.
Most countries will feel the consequences of the coronavirus outbreak through reduced tourism and trade. The company reduced its forecast for Chinese GDP growth this year from 5.8% to 5.2%, but called the impact of the epidemic on the economy “a severe but short-lived”.
Oil quotes are correcting down today because of the correction is associated with the continued inaction of OPEC+. The technical committee of the agreement recommended reducing production by 600K barrels per day, but the consent of all parties to the deal was not obtained. Besides, negotiations on an early February meeting of representatives of the cartel countries and their allies to discuss measures to stabilize the market did not bring success. The meeting should take place, as planned, in March. And it is not yet clear whether a compromise solution will be worked out on it.
SBUX Support and Resistance
Starbucks stock appears to be consolidating after a decline from the coronavirus. Looking at the one day chart, most of the technical signals are positive. Linear regression is signally a positive trend. However, investors should be ready for a correction if the coronavirus because of a more significant threat.
Resistance levels: 91.00. Support levels: 86.
SBUX Stock Price Recommendations
Jan-29-20 Resumed Stephens Equal-Weight $90
Jan-09-20 Upgrade Barclays Equal Weight → Overweight $107
Dec-12-19 Upgrade JP Morgan Neutral → Overweight $90 → $94
Dec-10-19 Initiated RBC Capital Mkts Outperform
Jul-29-19 Initiated Goldman Buy $110
Jul-29-19 Downgrade Robert W. Baird Outperform → Neutral $98
Jul-29-19 Downgrade JP Morgan Overweight → Neutral $91
Jul-26-19 Reiterated Telsey Advisory Group Market Perform $80 → $90
Jun-25-19 Initiated Credit Suisse Outperform $92
Jun-12-19 Initiated Evercore ISI In-line
May-06-19 Reiterated Telsey Advisory Group Market Perform $70 → $80
Apr-26-19 Downgrade Wells Fargo Outperform → Market Perform $83 → $80
Apr-08-19 Downgrade UBS Buy → Neutral $72 → $78
Jan-25-19 Reiterated Oppenheimer Outperform $70 → $72
Jan-11-19 Downgrade Goldman Buy → Neutral
Dec-03-18 Reiterated Telsey Advisory Group Market Perform $66 → $70
Nov-12-18 Upgrade Argus Hold → Buy
Nov-05-18 Upgrade Mizuho Neutral → Buy
Nov-02-18 Reiterated BofA/Merrill Buy $64 → $68
Oct-29-18 Reiterated Telsey Advisory Group Outperform $58 → $62
SBUX 1 Day Moving Averages – Strong Buy
Name Value Action
Exponential Moving Average (5) 88.70 Buy
Simple Moving Average (5) 88.56 Buy
Exponential Moving Average (10) 88.30 Buy
Simple Moving Average (10) 87.73 Buy
Exponential Moving Average (20) 88.42 Buy
Simple Moving Average (20) 88.83 Buy
Exponential Moving Average (30) 88.45 Buy
Simple Moving Average (30) 89.24 Buy
Exponential Moving Average (50) 88.22 Buy
Simple Moving Average (50) 88.57 Buy
Exponential Moving Average (100) 87.61 Buy
Simple Moving Average (100) 86.70 Buy
Exponential Moving Average (200) 84.79 Buy
Simple Moving Average (200) 87.15 Buy
Ichimoku Cloud Base Line (9, 26, 52, 26) 89.33 Neutral
Volume Weighted Moving Average (20) 88.39 Buy