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Can Starbucks Stock Heat up Again? By TipRanks

© Reuters. Is Starbucks stock on the rise?

Starbucks stock (NASDAQ 🙂 has seen significant pressure in recent months.

Yum China (YUMC), in an update, said that profits could fall as much as 50% to 60% due to new COVID-19 Delta variant worries. The news sent YUMC stock plummeting nearly 6%.

China, the major market for Starbucks’ Seattle-based coffee company, has undoubtedly been an important source of growth.

Despite the headwinds of COVID-19, Starbucks is still strong and will heat up once it has passed through another round.

In light of Starbucks’s momentum, which was before the poor news, and because the Delta-induced effect is likely to be baked into the share price now, I believe that SBUX stock should remain bullish. However, shares may experience a correction. (See SBUX stock charts on TipRanks)

Longer-Term Fundamentals

The latest update from Yum China doesn’t bode well for Starbucks, as it looks to cap off the year.

The long-term China thesis remains unaffected. Starbucks will continue to enjoy the benefits of China’s rising middle class for years to come.

It’s a secular tailwind and will continue to develop over many years. Short-term headwinds should not be an issue.

Wall Street’s Take

According to TipRanks’ consensus analyst rating, SBUX stock comes in as a Moderate Buy. There are twelve Buy recommendations and five Hold recommendations among the 17 analyst ratings.

The average SBUX price target is $132.14. The price targets of analysts range from $108 to $145 per shares.

Bottom Line

A majority of analysts remain bullish on SBUX stock. Analysts will now consider a slowdown in China. This may change.

In the weeks ahead, some analysts will follow the lead of YUMC’s analysts and downgrade Buy ratings or price targets.

These downgrades can further pressurize the stock and offer a tempting entry point to long-term investors who are looking for longer-term benefits.

Disclosure: Joey Frenette held shares in Starbucks at the time this article was published.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.