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Starbucks Lifts Some Prices in Northeast, Sunbelt

NEW YORK ( TheStreet) -- Shares of Starbucks (SBUX - Get Report) didn't participate in Tuesday's rally in the broad market after the company confirmed it's raising the prices of certain products in the Northeast and Sunbelt areas of the United States.

The stock closed the regular session at $45.28, down 1.6%, but ticked higher in after-hours action.

Spokesman Jim Olson said the average price increase was about 1%, and that store locations in Florida and California weren't impacted.

"Pricing for a grande brewed coffee, our most popular beverage, remains unchanged across all markets and the price for a grande latte remains unchanged across most markets," Olson wrote in an email.

Piper Jaffray analyst Nicole Miller Regan explained that in the past year Starbucks has switched to a more "dynamic" pricing model which she said helps to not push consumers to the breaking point with price hikes. This model continuously analyzes prices and looks at items' relationships to each other, she said.

Regan has a buy rating on the stock and a $55 price target. Of the 27 analysts covering the stock, the majority are bullish with 17 at either strong buy (9) or buy (8) and the remainder split between hold (9) and underperform (1). Wall Street's current median 12-month price target on the stock is $50.

Argus Research analyst John Staszak said he thought the company could have dipped deeper into consumers' pockets.

"Starbucks has not raised prices as much as it could," he said.

TheStreet Ratings has an A+ grade on Starbucks with a buy rating and a $56.96 price target.

Starbucks' shares are up more than 40% over the past year, and the stock hit a 52-week high of $47.05 early in Tuesday's session before declining for the rest of the day.

-- Written by Alexandra Zendrian in New York.



>To contact the writer of this article, click here: Alexandra Zendrian

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