Disney, Starbucks and Target all have more than $50 billion in market cap and are within 5% of their 2023 stock price lows.
- Disney reported earnings on Aug. 9, and beat earnings-per-share (EPS) estimates by 6.77%.
- Target reported earnings on Aug. 16, and beat EPS estimates by 26.85%.
- Starbucks reported earnings on Aug. 1, and beat EPS estimates by 5.09%.
Disney
The stock price for Disney (DIS) has dropped below $80 per share five times this year, with the first breach was just a month ago on Sept. 7. The company continues to see pressure from the market to deliver on its product suite, as exemplified in the pre-earnings post by Jermal Chandler, comparing Disney's lack of year-to-date (YTD) performance against other popular streaming companies.
The stock is now down over 10% on the year from the opening price of $88.98, and it's currently trading at $79.86. Disney is celebrating its 100th anniversary this year on Oct. 16, but the stock is trading at levels not seen since the pandemic, so if you're a believer in the company long-term, the price is certainly at a discount relative to the $118.18 stock price high Disney saw in February of this year.
Disney is expected to turn a profit in its streaming business in 2024, and that effort could be boosted with the colder months ahead of us and more people staying inside.
The company is set to report earnings mid-November and will look to build on the 6.77% EPS surprise it reported last quarter. Disney has an expected stock price move of +-$8.63 through January 2024, based on current implied volatility.
Target
Target (TGT) stock is currently trading at $107, after setting the 2023 stock price low just a day ago on Oct. 2. The stock is now down over 28% in 2023 and is having a hard time finding a bottom in this volatile environment. Target reported it is closing some big-market stores after shoplifting incidents, which certainly did not help the bullish sentiment for the stock. Interestingly enough, the company has beat EPS estimates in a big way three times in a row, boasting double digit surprises relative to expectation each time. Last quarter, Target beat EPS estimates by 26.85%.
Similar to other blue-chip stocks, Target's stock price is at levels we haven't seen in over three years. For those who may believe the mounting inflation and economic pressure on the consumer may force consumers to pinch pennies, Target may benefit because it markets itself as an affordable catch-all store.
Target is set to report earnings mid-November and will attempt to post a fourth double-digit EPS surprise. The stock has a +-$14.00 expected move through January 2024, based on current implied volatility.
Starbucks
Starbucks (SBUX) stock is down 16% in 2023, and the company set the 2023 stock price low the same day this article was published. Starbucks has beaten EPS estimates twice in a row, and it will look to repeat that next quarter. The stock is still not down nearly as much as some other blue-chip stocks this year, so there's hope for the coffee darling of the United States.
Analysts are signaling the stock is a "hold," although the fast food/drink market has taken a hit this year. Winter months are coming, which may boost hot-coffee sales compared with the summer months, but economic conditions may push people to make their own coffee to save some cash where they can. It will be interesting to see where Starbucks ends the year—higher or lower than $100 per share.
Starbucks is set to report earnings in early November and has a stock price expected move of +-$9.12 through January 2024, based on current implied volatility.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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