Deutsche Bank-Starbucks shares are not for buying
2022.12.05 08:29
Deutsche Bank-Starbucks shares are not for buying
Budrigannews.com – Following their decision to lower their recommendation for Starbucks (NASDAQ:), analysts at Deutsche Bank wrote, “Overall, this is a risk reward and valuation call, and there is not much more to it than that.”from Hold to Buy, with a $106 price target.
After a recent rally, Starbucks shares are back above $100, well above their May low of near $68.Friday, they were valued at $105.05.However, there may be limited upside from here.
The analysts stated, “In essence, we think the ‘easy part’ of the move has probably taken place with SBUX with the stock at $105, which is the reason for the ratings change at this point in time.”We believe ourselves to be really nonpartisan at current levels; neither beneficial nor detrimental.”
A general lack of enthusiasm can be seen in the fact that around twenty Starbucks analysts have assigned the stock an equivalent of a hold rating.This might be in part because of worries about the economy.
“We could envision a ’25x P/E multiple on a $5.00 adjusted EPS figure for Fiscal 2025e’ bull case emerging, which of course would equate to a $125 stock over time, and which represents 19% upside from current share price levels,” according to analysts at Deutsche Bank. “
Spending some additional time with the model and thinking through the setup from here, we could envision a ’25x P/E multiple on a $5.00 adjusted EPSWe believe that considering such a move over the next 12 to 18 months makes sense in the event that this bull case is ultimately proven to be correct;
However, the offsetting risk here is, of course, the fact that the potential U.S. recession dynamic has not vanished (i.e., that it is still very much lurking entering calendar 2023), and regardless of whether or not that is “well telegraphed,” it has the potential to have an effect on domestic business (and earnings).
