Starbucks stock price ignores expected plunge in Q2 earnings, prints 4-week high

Shares of Starbucks (NASDAQ:SBUX) are trading around 1% higher today despite expectations that its fiscal second-quarter earnings will drop by 46% amid the COVID-19 outbreak.

Fundamental analysis: Worst is still to come, warns Starbucks

Starbucks said last night that it expects to earn $0.32 per share for its fiscal second quarter, which is almost half the earnings of $0.60 per share earlier communicated.

Moreover, the coffeehouse giant said it is pausing its buyback program, and has also withdrawn the full-year guidance amid the coronavirus-related uncertainty. Starbucks previously announced that it expects its revenue to rise between 6% and 8% in 2020.

The company also said that it is fearing that the worst is yet to come.

The same-store sales fell 3% in the U.S., mainly due to the disastrous three last weeks of March. Up to March 11, U.S. same-store sales jumped 8%. For instance, same-store sales crashed between 60% to 70% in the last week of March.

Nicholson initiated coverage of Starbucks with a buy rating and $82 price target. Shares of Starbucks closed at $71.57 yesterday.

Technical analysis: Bulls eyeing $80

Starbucks stock price has now recovered half of the losses it recorded since January, as today’s high of $72.98 is also the 4-week high. Shares of Starbucks trade around 18% lower since the start of the year. 

Looking higher, the buyers are eager to push the price action towards the “magnet” zone between $80 and $82. These levels host a confluence of important price points and then attract the price action. Before that, the bulls will face $77 as an intraweek resistance.

Summary

Shares of Starbucks are trading in green today, despite the company’s latest report which predicts a 46% drop in earnings for the fiscal second quarter. Starbucks stock price is now trading comfortably above the $70 mark, with around half of the most recent losses recovered.