1228 ET - Rapidly increasing coffee prices--with futures up 120% over F23 lows--have put a spotlight on potential margin risk for Starbucks, according to BofA Securities in a research note. However, the analysts say coffee likely accounts for about 22% of Starbucks' cost of goods sold, and the coffee chain also locks in its supply of coffee one year in advance, mitigating risk. "Data on the collateral pledged as part of margin derivative requirements was below that of 2020-2023, suggesting coffee prices had behaved as expected through year end," the analysts say. The Starbucks brand remains fundamentally strong, the analysts add, and that "there are significant opportunities to reallocate resources." Shares rise 0.2% to $98.21, and are up 5.5% over the past 12 months. (sabela.ojea@wsj.com; @sabelaojeaguix)
(END) Dow Jones Newswires
January 22, 2025 12:28 ET (17:28 GMT)
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