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Investing.com - BMO Capital maintained its Outperform rating and $115.00 price target on Starbucks (NASDAQ:SBUX) despite the coffee chain’s fourth-quarter earnings miss. This target represents approximately 35% upside from the current price of $85.20, though InvestingPro data suggests the stock may be slightly overvalued based on its proprietary Fair Value model.
Starbucks reported fourth-quarter fiscal 2025 earnings per share of $0.52, falling short of the $0.56 consensus estimate, according to BMO Capital. The earnings disappointment came despite better-than-expected global comparable sales performance. InvestingPro data shows that 12 analysts have recently revised their earnings downward for the upcoming period, with EPS forecast for fiscal 2025 now standing at $2.14.
The investment firm noted that margins continue to face pressure from ongoing turnaround investments, which impacted the bottom line despite the sales improvement. BMO Capital has lowered its fiscal 2026 earnings per share forecast to better reflect this continued investment spending. The company’s gross profit margin stands at 23.74%, while its current ratio of 0.76 indicates that short-term obligations exceed liquid assets.
BMO Capital highlighted positive momentum in Starbucks’ U.S. comparable sales, which improved for a fourth consecutive quarter, turning positive in September with additional improvement observed in October. The firm cited this as evidence that the company’s turnaround efforts are gaining traction. Starbucks reported annual revenue of $36.69 billion with modest growth of 0.59%, though forecasts suggest a 2% increase in the coming year.
Despite reducing near-term earnings expectations, BMO Capital maintained its bullish outlook, stating that the risk/reward profile remains favorable based on Starbucks’ multi-year earnings recovery potential as the turnaround continues to build momentum through fiscal 2026. While trading at a high P/E ratio of 36.67, the company offers a 2.95% dividend yield and has raised its dividend for 16 consecutive years. For deeper insights into Starbucks’ valuation metrics and over 10 additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Starbucks reported its fourth-quarter earnings for 2025, showcasing a mixed financial performance. The company fell short of analysts’ expectations for earnings per share, posting $0.52 compared to the forecasted $0.56, a 7.14% miss. On a positive note, Starbucks exceeded revenue forecasts, reporting $9.57 billion against the anticipated $9.35 billion, a 2.35% surprise. In terms of analyst activity, RBC Capital lowered its price target for Starbucks to $100 from $110, citing cost savings uncertainty, but maintained an Outperform rating due to solid improvements in the U.S. market. Similarly, Piper Sandler reduced its price target to $100 from $105 while keeping an Overweight rating, following a modest U.S. recovery in same-store sales. Bernstein SocGen Group reiterated an Outperform rating with a $100 target, noting early signs of recovery in North American operations. The Green Apron model, implemented across Starbucks’ system, contributed to positive sales growth in September and October. These developments reflect ongoing efforts and challenges in Starbucks’ performance and market positioning.
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