NEW YORK, NY / ACCESSWIRE / June 21, 2018 / Shares of Starbucks hit a new low after the coffee powerhouse lowered guidance for same-store sales and announced that it would be closing over 150 stores in fiscal 2019. Shares of Papa John's sawa gain in Wednesday trading, popping back little after the stock dropped on a price target cut from Stifel analyst, Chris O'Cull.
RDI Initiates Coverage on:
Papa John's International, Inc.
Papa John's International, Inc. shares closed up 5.54% on a little over 4 million shares traded on Wednesday. There was no particular news from the company. Last week, Stifel Nicolaus analyst Chris O'Cull, lowered his price target on Papa John's shares to $50 from $57. He reiterated a "hold" rating. According to O'Cull's analysis, Papa John's domestic same-store sales for the second quarter to date are down 6% to 7% from a year ago, which is worse than the FactSet consensus of a 4.7% decline. The analyst noted, "We believe the problem primarily relates to a negative consumer brand perception that is tied to the found/spokesperson John Schnatter and his past comments about social issues affecting his profits. Management is employing various measures, but we believe fruits could take some time to manifest." O'Cull raised his price target on rival Domino's to $300 from $275 and reiterated a "buy" rating. It was in May that the company released itsfirst quarter financial results that did not hit expectations. Adjusted EPS at $0.50 was a 35.1% decrease from the first quarter of 2017 and lower than the EPS of $0.62 that analysts had expected.
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Starbucks Corporation closed down a little over 9% on Wednesday and also hit a new low of $51.58. The coffee giant was already seeing losses in after-hours trading on Tuesday after announcing dismal comps guidance and revealing that it would be shuttering over 150 stores in the U.S. in fiscal 2019. The fact that the company has historically closed roughly 50 stores a year and now will be closing three times that number did not resonate well with traders. The company said it is expecting same-store sales to grow just 1% for the quarter that begins next month. CEO Kevin Johnson commented, "Our recent performance does not reflect the potential of our exceptional brand and is not acceptable. We must move faster to address the more rapidly changing preferences and needs of our customers." Speaking on a call on Tuesday from the Oppenheimer Consumer Conference, Johnson said, "In this last quarter, we had an unplanned initiative related to the incident in Philadelphia that culminated in closing stores. It is not an excuse," for the 1% growth rate. Starbucks was in hot water back in April when a Philadelphia location arrested two black men for sitting in the store without ordering anything.
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Our Actionable Research on Papa John's International, Inc. (NASDAQ: PZZA) and Starbucks Corporation (NASDAQ: SBUX) can be downloaded free of charge at Research Driven Investing.
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