One Wall Street Analyst Believes Starbucks Stock is Undervalued by $20

Starbucks (NASDAQ: SBUX) investors were hit with disappointing news as the coffee chain reported a 2% decline in quarterly revenue and a 14% drop in profits. This led to a significant drop in Starbucks stock price, falling from over $88 to less than $75 per share.

However, amidst the gloomy financial results, there is a glimmer of hope for investors. Investment bank Barclays believes that Starbucks stock is now undervalued, presenting a buying opportunity. The analyst predicts that the stock could rise to as high as $95 over the next 12 months, a $20 increase from its current price.

Despite the optimistic outlook from Barclays, some concerns linger regarding Starbucks’ growth prospects. The company revised its earnings guidance, indicating that earnings may only see “low single digits” growth or even remain flat compared to 2023. This raises questions about the efficiency of Starbucks’ expansion plans, especially with the opening of more stores in the U.S. and China.

CEO Laxman Narasimhan has outlined a strategy to revitalize the business, promising results by the fourth quarter of this year. If successful, Starbucks could prove to be a worthwhile investment at its current price. However, investors should weigh the risks and potential rewards before making a decision.

While Starbucks may be facing challenges, the Motley Fool Stock Advisor team has identified other promising investment opportunities. It’s essential for investors to conduct thorough research and consider all factors before investing in Starbucks or any other stock.