Starbucks shares hit 18-month low

Starbucks shares hit their lowest level since late 2005 Tuesday as investor concerns about slower sales and profit growth continued to chip away at the once high-flying stock.
Some on Wall Street said the free fall -- including a 20 percent decline in 2007 -- represents the best buying opportunity for Starbucks shares in years as sales comparisons against year-ago results get easier later this year.
But others remain skittish about the future given increased competition in the United States, rising dairy and labor costs, and concerns about overall consumer spending.
Starbucks shares closed at $28.39 Tuesday on the New York Stock Exchange, 30 percent below a lifetime high of $40.01 hit on November 16 of last year. The stock hit a low of $28.37 during Tuesday's session, a level unseen in 18 months.
According to analysts, much of the stock's recent weakness stems from concerns that labor and other rising costs are hampering profits while increases in sales at stores open at least 13 months, a key measure of retail health, are contracting. At the same time, competition from McDonald's new coffee offerings and Dunkin' Donuts' U.S. expansion has heated up in recent months.
J.P. Morgan analyst John Ivankoe said in a research note earlier this month he expected Starbucks' multiple to stay at the high end of the 25 to 30 range, adding that "the potential reward outweighs recent risk."
Ivankoe has an "overweight" rating on Starbucks shares.
Others think the stock may have farther to fall.
"The shares are undervalued, but we wouldn't recommend buying," said Morningstar analyst John Owens.