Starbucks Kicks Off Big Earnings Week

Starbucks (SBUX) will report quarterly results in tomorrow’s postmarket session amid a huge earnings week that includes four of the Magnificent 7 (MSFT, META, AAPL, AMZN) as well as a host of other major names. 

Shares of the coffee chain have largely been sideways for several years. The peak came at the all-time highs of 126.32 from July, 2021 and after a sharp decline the price action has largely been between a broad range of 116 to 72. Price is down about -19.6% from those highs as of Friday’s close, and the options market shows a roughly +/-4.7% expected move for the weekly Aug. 1 expiration.

The market is looking for consensus adjusted EPS of $0.66 vs. $0.93 from one year ago (-29%), and for revenue to come in at $ 9.29B vs. $9.11B last year (+1.8%). However, a recent note from Oppenheimer said Starbucks shares seem disconnected from the company’s fundamentals, specifically that shares are up about 3% year-to-date while 2026 EPS estimates are down about -25%. The note also said the Street’s estimates are looking for healthy sales recovery through that same period, which spells a “difficult path to uncover the earnings upside required to turn bullish at the current 33x forward P/E.”

Another note from Jefferies earlier this month called SBUX’s current valuation “unwarranted” and downgraded the stock to Underperform from Hold while maintaining a $76 price target, citing the company’s “questionable strategic priorities” that do not focus on cold drinks and drive-through locations.

The chart shows that shares have been drifting sideways around the 96 level after encountering a key resistance area heading into earnings, which is a gap from early April at 97.41. Price tested this area twice in recent weeks before withdrawing to a familiar range, which is the area between about 98 to 92. This area represents the bulk of the trading activity for the past year as shown by the yearly Volume Profile Point of Control at 95.59.

Major moving averages are also clustered together and moving sideways, which suggests a lack of clear trend direction. If price breaks above the previously discussed heavy volume area/gap level from 95-98, the next set of highs near 100 could present resistance. To the downside, a break below the recent lows around 90 could be noteworthy with another heavy volume area near 83.