Starbucks News and Analysis: SBUX earnings push stock down below critical support

Clay Webster FXStreet

Starbucks is down 5.8% in the Friday premarket after reporting earnings Thursday evening that missed Wall Street estimates for revenue. The office worker energizer reported $8.1 billion in fiscal fourth quarter revenue against estimates of $8.22 billion. Though adjusted earnings per share (EPS) of $1 came in a penny over consensus, the market looked askew at same store sales growth both in the US and internationally coming in below expectations. Sales in China fell 7%. Likewise, 2022 EPS guidance near $3.40 was below analyst estimates for $3.73.

SBUX stock breaks critical support

It may not have happened in the public trading hours yet, but SBUX stock's premarket fall on Friday in the face of disappointing earnings brought it below a critical support level that it has bounced off of a total of five times since early. This tough support level surronds $109.50. On May 13 and 19, June 18, and October 6 and 13 SBUX price bounced off this region before reversing higher. At $106.62 in the premarket, SBUX has broken through what was until now solid support.

At the current premarket price, SBUX is just under a second support line at $107.50. This level, which served as resistance on January 4 and February 5, may serve as a bottom once the regular market opens. If not, Starbucks stock could trend as low as $100.

We at FXStreet think this is unlikely though. Starbucks has raised its dividend for 11 years in a row and is thus a staple of large institutional buyers intent on dollar cost averaging into dependable dividend growers. SBUX is just too attractive at these prices to stay here long.

Some investors might get cold feet after the analyst downgrades. Stifel dowgraded SBUX to Hold. Cowen & Co. cut its price target to $125, while Oppenheimer cut their target to $130.

SBUX 1-day chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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