Trading Strategies For Starbucks Stock Heading Into Q3 Earnings

Zinger Key Points
  • Analysts estimate Starbucks will print earnings per share of 95 cents on revenues of $9.291 billion. 
  • Starbucks was working to print a hammer candlestick on Tuesday just above the 200-day SMA.

Starbucks Corporation SBUX is set to print third-quarter financial results after the market closes Tuesday. The stock was nudging lower heading into the event

When the multinational coffee chain printed its second-quarter results May 2, the stock plunged over 9% the following day and entered a downtrend, which brought Starbucks to the $95.55 mark on July 7. 

For the second quarter, Starbucks reported EPS of 74 cents on revenue of $8.72 billion. The company beat the EPS estimate of 65 cents and the $8.4-billion revenue estimate. 

For the third quarter, analysts estimate Starbucks will print earnings per share of 95 cents on revenues of $9.291 billion. 

On July 27, Wedbush analyst Nick Setyan maintained a Neutral rating and raised the price target from $110 to $112. The new price target suggests about 12% upside for the stock. Read More… 

From a technical analysis perspective, Starbucks's stock looks neutral heading into the event, trading close to the 200-day simple moving average (SMA). It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat. 

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The Starbucks Chart: Starbucks broke up through the 200-day SMA on July 12 and has spent the last four trading days back testing the area as support. On Tuesday, Starbucks temporarily fell through the 200-day SMA but by the afternoon, the stock had regained the area as support. 

  • On Tuesday, Starbucks was working to print a hammer candlestick, indicating the local bottom may have occurred. If the stock receives a bullish reaction to its earnings print, the candlestick will confirm and Starbucks is likely to negate its downtrend by rising on Wednesday. 
  • If the stock suffers a bearish reaction to the news and falls under the 200-day SMA, the downtrend will remain intact and the stock could enter into a longer-term bear cycle. 
  • Starbucks has resistance above at $104.02 and at $109.05 and support below at $99.15 and at $97.19. 

Read More:  Starbucks Earnings Are Brewing: Options Market Implies 5% Move

Photo via Shutterstock.

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