Coffee retailer Starbucks Corporation (
) 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
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
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 (
) 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
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