Piper Jaffray Raises Target, Estimates for Starbucks (SBUX)

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Coffee retailer Starbucks Corporation ( SBUX ) late Wednesday saw its price target and earnings estimates boosted by analysts at Piper Jaffray.

The firm raised its price target for SBUX to $34 from $32, and reiterated its "Overweight" rating. That new target represents an expected 39% upside to the stock's Wednesday closing price of $24.50.

Piper Jaffray said it's becoming "increasingly confident" that Starbucks is transitioning into a portfolio growth name, due to its burgeoning consumer packaged goods business. Continuing, the analyst commented, "From a valuation perspective, we believe the CPG business merits $13 of value, implying the core business is trading at ~5x ev/EBITDA… conclusion is the CPG segment should help to deliver 400 bps of operating margin expansion, over time."

The firm raised its full-year 2010 sales estimate from $10.55 billion to $10.56 billion, and full-year 2011 estimate from $10.86 billion to $10.91 billion.

Starbucks shares were mostly flat in premarket trading Thursday.

The Bottom Line
We have been recommending shares of SBUX since July 22, 2010, when the stock was trading at $24.86. The company has a 2.12% dividend yield, based on last night's closing stock price of 24.50.

Starbucks Corporation ( SBUX ) is a "recommended" dividend stock, holding a Dividend.com DARS™ Rating of 3.5 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 Nasdaq, Inc.

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