Prices for Arabica coffee increased over concerns about dry weather in Brazil which could cut production numbers. Brazil's National Coffee Council recently lowered its forecast for the season's harvest to between 40.1 million bags and 43.3 million bags from the previous estimate of 44 million bags.
Starbucks may not pass that price increase to customers this year. In recent interviews CEO Howard Shultz said the company would hold off on any price increases.
Some Starbucks locations reportedly lowered prices last week to combat McDonald's (MCD) free coffee promotion.
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TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate STARBUCKS CORP (SBUX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."