Starbucks Stock Forecast September 2021 – Good Time to Buy SBUX Stock?

Global coffee chain Starbucks (SBUX) is up almost 16% so far in the year and is slightly underperforming the S&P 500. What’s the forecast for SBUX stock and is it a good buy in September 2021?

Notably, billionaire investor Bill Ackman, who rose to fame with his bet against the credit markets in the first quarter of 2020, had bought Starbucks shares last year. However, as the stock rebounded sharply from last year’s lows, Ackman exited the position this year and instead invested in Domino’s Pizza. Meanwhile, Ackman said that investors can still make returns by staying invested in SBUX stock.

Starbucks stock recent developments

In July, Starbucks released its fiscal third-quarter 2021 results that showed revenues rising 78% to a record $7.5 billion. The comparable sales growth in the US was 83% while the two-year growth rate, which is a better indicator considering the slump in 2020, was 10%. The company has been expanding in China where it has over 5,000 stores while the global store footprint was a record 33,295 stores.

The company reported a record adjusted EPS of $1.01 and also raised the guidance for the fiscal year. Meanwhile, some of Starbucks employees in Buffalo, New York-area are pushing to form a union. The Buffalo area workers formed a committee last month to help address employee issues. In a letter to Starbucks CEO Kevin Johnson, the committee asked the company to “provide a level playing field that will enable Starbucks partners to chose whether or not to unionize without fear of reprisal.”

Notably, some of the Amazon workers have also been making efforts to unionize. While the company had increased its minimum wage, many have complained of the poor working conditions at the warehouses.

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SBUX stock price forecast

Wall Street analysts are divided over the forecast for SBUX stock. It has received 21 buys and 13 hold ratings. However, none of the analysts polled by CNN Business rates the stock as a sell. Starbucks’ median target price of $135 is a 13.1% upside over current prices. Its lowest target price is $108 which is a discount of 9.5% over current prices. Its street high target price of $148 is a premium of 24% over current prices.

Wall Street analysts on Starbucks stock

Last month, Cowen reiterated its overweight rating on SBUX stock and said that it sees several positive catalysts for the company which should help offset any negative impact from the coronavirus. “We acknowledge the risk the delta variant presents with prolonged work from home, though we argue the company’s thorough long-term playbook should outweigh the risk of a potential near term sales slowdown,” it said in its note.

Notably, the rise in new coronavirus cases in the US, as well as some other regions, is a potent risk for reopening plays like Starbucks. However, countries have been mindful to keep lockdowns as the last measure as it can negatively impact the economic activity and cripple the economic recovery.

Oppenheimer had also reiterated its buy rating on Starbucks stock ahead of its earnings. The brokerage said that the company’s earnings could end up surpassing analysts’ estimates not only for the quarter but throughout 2022. SBUX indeed posted better than expected earnings in the quarter.

SBUX stock price long-term forecast

Looking at the long-term forecast, international expansion, especially in China, could be a key driver for Starbucks. Hedge fund Polen Capital sounded positive on SBUX stock in its recent investor letter and said that the company’s underlying business looks strong. Analysts expect Starbucks ’ revenues in this fiscal year to rise 24.1% year-over-year. The rise is coming from a lower base, but even if we compare with the fiscal year 2019, revenues are expected to rise 10%. The company’s topline is expected to rise 9.7% in the fiscal year 2022 as well, continuing the recovery that we’ve seen over the last couple of quarters.

Starbucks stock price valuation and technical analysis

Starbucks stock currently trades at an NTM (next-12 months) PE multiple of almost 32x. The multiples have averaged 33.4x over the last three years while the five-year average is 29.8x. The current valuation multiples look reasonable looking at the growth outlook for the company.

Starbucks stock is looking bullish on the charts also and trades above the 50-day, 100-day, and 200-day SMA (simple moving average). It also trades above the short-term moving averages and is trading near the all-time highs. The stock’s 14-day RSI (relative strength index) is 59.6 which is a neutral indicator. Its MACD (moving average convergence divergence) meanwhile gives a buy signal.

Atlantic Equities, which initiated coverage on SBUX stock earlier this year pointed to the company’s international expansion and ability to innovate to support its bullish thesis. Overall, Starbucks looks like a good stock to buy and bet on the continued recovery in the global economy.

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