Piper Jaffray Backs its “Buy” Rating on Starbucks; Global Growth Still Attractive (SBUX)

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Coffee retailer Starbucks Corporation ( SBUX ) on Tuesday saw its "Buy" rating reiterated by analysts at Piper Jaffray.

The firm also backed its $50 price target on SBUX, suggesting a nearly 33% upside to the stock's Monday closing price of $37.65.

A Piper Jaffray analyst commented, "We continue to believe Starbucks remains well-positioned in spite of ongoing coffee price inflation, where prices were still up substantially on a y/y basis as of August, but have been moderating of late. We note that SBUX has 100% of its coffee needs contracted for FY11 and FY12. In particular, we remain attracted to the company's ongoing transition to a global growth portfolio via the growth and evolution of its consumer packaged goods (CPG) business segment which we believe can help drive meaningful operating expansion of ~400 bps over time. We reiterate our Overweight rating and $50 price target, which implies a ~$7/share valuation for the company's CPG segment."

Starbucks shares were unchanged in premarket trading Tuesday.

The Bottom Line
Shares of Starbucks ( SBUX ) have a 1.38% dividend yield, based on last night's closing stock price of $37.65. The stock has technical support in the $34 price area. If the stock can firm up, we see overhead resistance around the all-time high levels of $40-$41 a share.

Starbucks Corporation ( SBUX ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 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 .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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