Starbucks Stock Shines as Analysts Mull Early Merits of Turnaround Plan
Key Takeaways
Starbucks (
SBUX
) shares have moved higher Wednesday as some analysts seem to be buying in—albeit cautiously—on new
Chief Executive Officer
Brian Niccol’s “
Back to Starbucks
” turnaround plan.
“The pace of change is accelerating at Starbucks,” JPMorgan analysts said in a research report Wednesday, pointing to a narrower-than-expected 4% decline in global
same-store sales
in the company’s fiscal first quarter. The firm holds an “overweight” rating and a $105
price target
, encouraging investors to “focus on the improving momentum in the business which should carry shares higher.”
The JPMorgan target is below Starbucks’ recent Wednesday level after shares jumped nearly 9% to $108.99
Niccol, who
took the reins
in September, has implemented the “Back to Starbucks” turnaround strategy that has included the reinstatement of a policy requiring customers to make a purchase if they want to spend time in the company’s cafes or use its bathrooms.
Some Analysts Are More Bearish
Jefferies analysts had a more bearish stance, seeing “[n]o early signs of meaningful improvement” in same-store sales or traffic trends. The firm on Wednesday wrote that it expects
Starbucks
‘ current woes “to last longer than most investors expect” but said the company should benefit “eventually” from strategic changes now underway. Jefferies maintained its “underperform”
rating
and price target of $76.
Oppenheimer analysts, taking a more Goldilocks approach, said, “Our thesis [is] to remain on the sidelines,” reiterating a neutral “perform” rating. Starbucks has a “favorable setup” under Niccol, but “we struggle to identify a clear path” for same-store sales,
margin
, and
earnings per share
improvement, said Oppenheimer.
On the company’s earnings call Tuesday, CFO Rachel Ruggeri said Starbucks expects that
year-over-year
earnings pressure could “intensify” in the current quarter, before improving in the second half of fiscal 2025.
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