Starbucks' forecast blew analysts' long-term projections out of the water
The shares of Starbucks Corporation (NASDAQ:SBUX) just nabbed a new record high of $105.20 this morning, after the company hiked its 2022 earnings per share (EPS) forecast by at least 20%, while projecting 10-12% growth for 2023 and 2024. The chain also predicted a major return to cafes once the pandemic is over, and announced plans to build even more walk-thru locations without seating in major cities. These numbers blew analysts' long-term projections out of the water, and the brokerage bunch is responding in turn.
So far, no less than 16 analysts have lifted their price targets, the highest coming from Oppenheimer to $120 from $112. This represents uncharted territory for SBUX, which is up 4.5% at $104.89 at last check. Meanwhile, the 12-month consensus price target of $103.69 is right in line with current levels.
This surge in shares is far from a one-off for SBUX, as the stock has been nabbing fresh highs on a weekly basis since its early November bull gap. The 10-day moving average has provided consistent support for the security's climb, guiding it to a year-to-date lead of 19.2%.
Options players are already circling the stock, too, with 52,000 calls and 15,000 puts across the tape so far -- three times the average intraday amount. The most popular contract so far is the weekly 12/11 105-strike call, followed by the 104-strike call in the same series. This suggests these traders are speculating on more upside for the underlying stock by the time these contracts expire tomorrow.
Despite this recent surge in shares, Starbucks options are still quite affordable. This is per the security's Schaeffer's Volatility Index (SVI) of 26%, which stands higher than just 11% of readings from the past 12 months. This means options traders are pricing in relatively low volatility expectations at the moment.