Analyst Upgrades Starbucks Following Post-Earnings Sell-Off: ‘Market Is Being Shortsighted’

Analyst Upgrades Starbucks Following Post-Earnings Sell-Off: ‘Market Is Being Shortsighted’
The Starbucks logo is display on a cup and bag at a Starbucks store in San Francisco, Calif., on Oct. 29, 2021. Justin Sullivan/Getty Images
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Starbucks Corporation shares bounced back on Monday after the stock received a Wall Street upgrade by an analyst who believes the stock’s post-earnings sell-off is overdone.

The Analyst

Stephens analyst James Rutherford upgraded Starbucks from Equal Weight to Overweight and raised his price target from $118 to $130.

The Thesis

In the upgrade note, Rutherford said the market is being too short-sighted when it comes to Starbucks’ raising employee wages. Rutherford said labor is currently the largest competitive advantage in the foodservice space.

“And by paying its employees more than the competition can/will pay, Starbucks is positioning itself to take market share for years,” he wrote.