I'm not afraid to hold into earnings
Starbucks is feeling the pressure today after Deutsche Bank downgraded the stock from Buy to Hold citing a premium valuation and lofty expectations.
So is it time to take a coffee break? The Halftime Report experts debated today. Pete Najarian found the call odd: "We had a targetof 70 and now it's fully valued because it reached everything that it was going to reach in terms of the call. I wouldn't have expected the stock to be very close to 70 rather than very close to a 64. There are a lot of different reasons why I don't agree with this call and this pull back is an opportunity." Pete owns calls in the stock.
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Joe Terranova took a similar stance saying "expectations are incredibly low and they could surprise this quarter." Joe was focused on three key areas: Management commentary, packaged coffee and K cups, and the gift card component. He recommends owning calls in the stock.
Not everyone on the desk was bullish. Stephanie Link agrees with the call saying the stock is too rich. "I sold the stock at $59. This is a shorter term call for me. If this stock were to pull back to mid $50s and low $50s that's already valuation creation." At this point, she believes there are other names that are more attractive in the consumer discretionary sector right now.
While Josh Brown agrees with Stephanie that the stock is a bit rich, he believes in the name long-term. "I'm not afraid to hold this name into earnings…if this name breaks $62.5, the juice is loose. From a technical perspective you've got an inverse head and shoulders and a rising 200-day acting as support."