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Friday, July 07, 2006

Starbucks: When 1% Is Worth $2.75 Billion (SBUX)

Starbucks said that its same-store June sales were up 6%. Wall Street wanted 7% and the company lost 5% of its value, or $2.75 billion. The stock now trades at $36 off a 52-week high of $39.88.

How bad was the news?

Starbuck's sales for the five weeks ending July 2 were $751 million, up 22% from the same period a year ago. Citigroup maintained its price target of $40, over 11% above where the stock trades now.

Investors still expect great things from the coffee store chain. In the words of a ThinkEquity analyst quoted by the Associated Press, "the java chain's third-quarter results, which the company plans to report Aug. 2, indicate strong revenue and same-store sales growth".

Maybe someone missed that note.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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