Low-price competition is also expected to persist
TD Cowen downgraded
Starbucks Corp (NASDAQ:SBUX) to "market perform" from "outperform," and slashed its price target to $107 from $117. The brokerage firm noted macro challenges for same-store sales in China, as well as low-priced competition that could persist for the next couple of years. At last check, SBUX is down 2% at $94.84.
Overhead pressure from its 50-day moving average has kept the equity in check since mid-August, while the $100 region rejected a rally later that month. SBUX currently sports a 4.1% year-to-date deficit, and could soon retest support at the $94 level.
Short-term options traders are extremely bearish, per the security's Schaeffer's put/call open interest ratio (SOIR) of 1.11 that sits in the top percentile of annual readings. Echoing this, Starbucks stock's 10-day put/call volume ratio of 1.90 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 97th percentile of its annual range.
The equity boasts affordably priced premiums, too, per its Schaeffer's Volatility Index (SVI) of 18% that ranks higher than only 6% of annual readings. In other words, the options pits are pricing in low volatility expectations right now.