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Starbucks Stock Shines as Analysts Mull Early Merits of Turnaround Plan

Deb Cohn-Orbach / UCG / Universal Images Group via Getty Images

Deb Cohn-Orbach / UCG / Infinite Images Group via Getty Images

Key Takeaways

  • Starbucks stock jumped Wednesday when the company reported monetary first-quarter results after Tuesday’s bell.
  • Same-store sales declined less than analysts expected in the years, a sign that new Chief Executive Officer Brian Niccol’s “Back to Starbucks” turnaround plan could be off to a reassuring start.
  • Chief Financial Officer Rachel Ruggeri said that year-over-year earnings pressure could “deepen” in the company’s current quarter, before improving in the second half of fiscal 2025.

Starbucks (SBUX) shares have prompted higher Wednesday as some analysts seem to be buying in—albeit cautiously—on new Chief Executive Officer Brian Niccol’s “Defeat 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% fade in global same-store sales in the company’s fiscal first quarter. The firm holds an “overweight” rating and a $105 price goal, encouraging investors to “focus on the improving momentum in the business which should carry shares higher.”

The JPMorgan quarry is below Starbucks’ recent Wednesday level after shares jumped nearly 9% to $108.99

Niccol, who took the tillers in September, has implemented the “Back to Starbucks” turnaround strategy that has included the reinstatement of a policy requiring customers to win 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 numberless bearish stance, seeing “[n]o early signs of meaningful improvement” in same-store sales or traffic trends. The firm on Wednesday inscribed that it expects Starbucks’ current woes “to last longer than most investors expect” but said the society should benefit “eventually” from strategic changes now underway. Jefferies maintained its “underperform” rating and price aim of $76.

Oppenheimer analysts, taking a more Goldilocks approach, said, “Our thesis [is] to remain on the sidelines,” reiterating a neutral “execute” rating. Starbucks has a “favorable setup” under Niccol, but “we struggle to identify a clear path” for same-store sales, border, 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 influence could “intensify” in the current quarter, before improving in the second half of fiscal 2025.

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