There’s a lot to be optimistic about in the Services sector as 2 analysts just weighed in on Costco (COST) and Starbucks Corp (SBUX) with bullish sentiments.
Costco (COST)
In a report released today, Rupesh Parikh from Oppenheimer maintained a Buy rating on Costco, with a price target of $240. The company’s shares closed yesterday at $226.51.
Parikh observed:
“Yesterday evening, COST reported adjusted EPS of $1.61 vs. a Street figure of $1.62. Comps increased a robust 7.5%, which continues to represent a stand-out performance in our food retailing/discounter coverage. However, consistent with recent COST reports, earnings upside remains a challenge due in part to increased cost pressures and company investments. This has become a theme lately in the retail portion of our coverage universe, and an increasing concern for us as we look to 2019. COST remains a top pick for us, and we’d take advantage of the weakness. Please see our latest deep dive titled A for COST Shares (8/21/2018) for our latest fundamental views. We continue to see limited EPS upside consistent with our prior research.”
According to TipRanks.com, Parikh is a 5-star analyst with an average return of 15.0% and a 60.8% success rate. Parikh covers the Services sector, focusing on stocks such as Blue Apron Holdings Inc, United Natural Foods, and Wal-Mart Stores Inc.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Costco with a $249 average price target, a 9.9% upside from current levels. In a report issued on December 10, Robert W. Baird also reiterated a Buy rating on the stock with a $250 price target.
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Starbucks Corp (SBUX)
Oppenheimer analyst Brian Bittner maintained a Buy rating on Starbucks Corp today and set a price target of $70. The company’s shares closed yesterday at $66.91, close to its 52-week high of $68.98.
Bittner wrote:
“Following its +37% move from our mid-June Consumer Conference into this week’s analyst event, the SBUX story has regained traction with investors. At the event mgmt smartly recalibrated long-term targets to +3-4% SSS and 10%+ EPS growth (vs. +3-5% and 12%+). We believe this creates more achievable goals and lowers future execution risk. Fresh SSS drivers coming to market include delivery, continued digital conversion and beverage innovation while the company remains committed to tighter cost controls and more shareholder-friendly uses of cash.”
According to TipRanks.com, Bittner is a 5-star analyst with an average return of 10.8% and a 66.2% success rate. Bittner covers the Services sector, focusing on stocks such as Restaurant Brands International, Jack In The Box Inc, and Cheesecake Factory.
Currently, the analyst consensus on Starbucks Corp is a Moderate Buy with an average price target of $67.89, which is a 1.5% upside from current levels. In a report issued on November 30, Tigress Financial also reiterated a Buy rating on the stock.
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