Traders disagree with Goldman Sachs’ top restaurant pick for 2022

on Dec 14, 2021
  • Goldman Sachs picks Starbucks as one of its top restaurant stocks for 2022.
  • Lebenthal says if guidance doesn't improve in Q1, he'll be out of SBUX.
  • Ritholtz Wealth's Josh Brown wouldn't call Starbucks Corp a top idea either.

Shares of Starbucks Corp (NASDAQ: SBUX) are down 1.0% on Tuesday despite Goldman Sachs adding the American multinational chain of coffeehouses to its list of “top ideas” in the restaurant space for 2022.

Lebenthal is not happy with Starbucks

On CNBC’s “Halftime Report”, Cerity Partners’ Jim Lebenthal disagreed with Goldman Sachs. Of the 25 stocks on his portfolio, he added, Starbucks was among ones he liked the least at this point in time.  

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They had a very bad quarter with bad guidance. I need to see guidance, particularly in China, improve in Q1, or I’ll be gone from this stock. I want it to perform just a little bit better than SPX next year. I’m not looking for shoot the lights out here, but they need to get their China operations on.

In Q4, Starbucks’ revenue fell shy of estimates. The company guided for a 10% growth in its adjusted EPS for fiscal 2022 versus more than 15% expected.

Josh Brown wouldn’t call it a top pick either

During the same interview, Josh Brown also said he wouldn’t call the stock a top pick in the restaurant industry. He was, however, comfortable with his position in Starbucks.

It’s up 83% in last 3 years, and that includes the worst pandemic in a century. So, I think they’re doing okay. I’m in Starbucks, and I accept there’ll be a quarter or two that disappoints. When there’s a real problem with it, I’ll change my mind. That hasn’t happened with this name in 25 years.

Last week, Hightower’s Stephanie Link picked McDonald’s over Starbucks, citing the former was relatively cheaper than the latter.

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