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On Wednesday, Bernstein SocGen Group maintained a positive outlook on Starbucks Corporation (NASDAQ:SBUX), reiterating an Outperform rating and a price target of $115.00. According to InvestingPro data, the stock is currently trading near its 52-week high of $103.32, having delivered an impressive 35.16% return over the past six months. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. The firm’s analyst highlighted Starbucks’ first-quarter results for the fiscal year 2025, noting that the company surpassed expectations with global same-store sales (SSS) declining by 4.0%, compared to the consensus estimate of a 5.3% drop. This outperformance was observed in both the North American and International segments, with SSS in North America down 4.0% against an anticipated 5.0% and International SSS also falling by 4.0%, beating forecasts of a 6.1% decrease. With a market capitalization of $114 billion and annual revenue of $36.2 billion, Starbucks maintains its position as a dominant player in the global coffee market. InvestingPro subscribers have access to 12 additional key insights about Starbucks’ financial performance and market position.
Despite a continued squeeze in North American traffic, which saw an 8% reduction versus the forecasted 7.5%, Bernstein’s analysis conveyed optimism. The firm commended the quick and decisive actions taken by Starbucks’ management in response to the challenges faced. InvestingPro’s Financial Health Score rates Starbucks as "GOOD," reflecting the company’s strong operational foundation and consistent dividend payments, which it has maintained for 16 consecutive years. The analyst believes that the company’s recovery in comparable store sales might occur sooner than initially expected, potentially starting before the second half of the year, as previously thought. This sentiment is supported by the company’s own expectations of positive overall comparable sales in the second quarter of 2025.
Starbucks’ intra-quarter acceleration in comparable sales, along with increased advertising expenditure, higher staffing levels, and urgent management actions, are seen as positive indicators for a quicker turnaround in customer traffic. Additionally, the firm anticipates that the capital expenditures required for Starbucks’ recovery may be less than previously estimated. This follows the company’s strategic decision to install new Siren brewing equipment in a select number of high-traffic stores rather than aiming for a broader rollout.
The analyst also forecasts an increase in general and administrative (G&A) expenses in the second quarter as Starbucks moves forward with its restructuring plans and tests new staffing models in 700 stores. Despite these expected costs, Bernstein predicts that the investments made by Starbucks will yield returns in the second half of the fiscal year 2025. The company’s efforts to optimize order sequencing and enhance throughput by focusing on operational efficiency are anticipated to contribute to this positive outcome.
In other recent news, Starbucks Corporation has seen significant developments. Stifel analysts have maintained a Buy rating and increased the price target to $114, indicating confidence in Starbucks’ ongoing efforts to enhance customer experience and rejuvenate its brand. In contrast, Jefferies analyst Andy Barish maintained an Underperform rating with a target of $76, citing concerns about the core business in the U.S. and China. RBC Capital Markets sustained an Outperform rating and a $115 price target, expressing confidence in Starbucks’ revenue drivers despite a margin outlook for 2025 that fell short of expectations. UBS analyst Dennis Geiger increased the price target to $105 while maintaining a Neutral rating, anticipating improved year-over-year trends in the second half of the fiscal year. Starbucks is also testing a new order sequencing algorithm at pilot locations to streamline service and reduce bottlenecks. The Kuwait-based conglomerate, Alshaya Group, paused discussions regarding the sale of a stake in its Starbucks Corp . franchise. These are all recent developments that provide investors with insights into Starbucks’ operational and financial landscape.
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