Starbucks (SBUX) tumbles as expectations are shaken amid high cost backdrop

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Starbucks Corporation (NASDAQ:SBUX) fell in early trading after the company’s earnings report highlighted high costs the coffee chain faces. As Starbucks will increase menu prices this year and cut some expenses to offset rising costs, expectations are growing.

Goldman Sachs lowered its rating on Starbucks (SBUX) to Neutral from Buy. The company is cautious on the road to recovery for SBUX given continued volatility in trends, potential for sustaining higher revenue despite wage investments, higher distribution costs and implications the normalization of consumer behavior. “We view the stock’s upside as limited given continued cost pressures across the business, potential instability in US trends/dynamics and a still uncertain recovery in China,” warned analyst Jared Garber.

Cowen reduced his price target on SBUX to $115 from $125, but kept a positive stance. “We welcome the multi-year EBIT margin forecast which includes a long-term return to 18% to 19% in 2024, suggesting that an 18.4% consensus is safe,” noted analyst Andrew Charles.

Elsewhere on Wall Street, Jefferies lowered its price target to $130 from $142, Morgan Stanley lowered its price target to $107 from $115, and Piper Sandler lowered its PT to $100 from $100. $108.

Starbucks (SBUX) shares fell 2.85% premarketing at $95.95 following the shortfall.

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