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Why Starbucks' Stock Is Rising Today

By John Rosevear – Apr 22, 2020 at 1:19PM

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An upbeat analysts' note ahead of earnings has investors in a buying mood.

What happened

Shares of coffee giant Starbucks (SBUX 1.47%) were moving up on Wednesday, after an analyst raised his price target for the stock ahead of next week's earnings report. 

As of 2 p.m. EDT today, Starbucks' shares were up about 5.7% from Tuesday's closing price. 

So what

In a note on Wednesday morning, MKM Partners analyst Brett Levy raised his price target for Starbucks' stock to $70 from $60, while maintaining a neutral rating on the stock. 

Levy said that he's raising his estimate for Starbucks' earnings per share to $0.30 from $0.13, and his estimate for revenue to $5.8 billion from $5.2 billion, as he believes that the company's sales declines in the quarter were more moderate than previously expected. 

A Starbucks coffee cup.

Image source: Starbucks.

Starbucks moved its stores to takeout-only service in mid-March, but it has been able to keep many open on that limited basis even as other retail-focused businesses have shut down amid the coronavirus pandemic.

Levy also said that the recent stock market recovery, and signs that investors are willing to look past near-term issues with businesses like Starbucks, drove an increase in his view of the stock's valuation.

Now what

Investors won't have to wait too long to find out if Levy is right. Starbucks will report its fiscal second-quarter earnings after the market closes next Tuesday, April 28. 

John Rosevear owns shares of Starbucks. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

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