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Investing.com - Jefferies maintained its Underperform rating and $76.00 price target on Starbucks (NASDAQ:SBUX) in a research note released Thursday. The coffee giant, currently trading at $83.83 with a market cap of $95.5 billion, is trading at a relatively high P/E ratio of 36.2x. According to InvestingPro analysis, the stock appears to be fairly valued at current levels.
The research firm highlighted Starbucks’ announcement of an expected 1% decline in North America company-owned units in fiscal year 2025, with total expected units including licensed locations significantly lower versus consensus estimates for this year and next.
Jefferies noted the restructuring comes with an estimated cost of $1 billion, adding that while investors largely anticipated this news, the challenges facing Starbucks in both the near and long term remain underappreciated.
The firm stated that visibility is too low to expect any material same-store sales or margin benefits from the restructuring efforts.
Starbucks has been facing headwinds in its core North American market, prompting the company to announce store closures as part of its broader restructuring initiative.
In other recent news, Starbucks has announced a significant restructuring plan involving a $1 billion investment aimed at revitalizing its store portfolio and enhancing the customer experience. As part of this strategy, the company plans to close certain coffeehouses that do not meet criteria for the physical environment or financial performance. This restructuring is expected to result in the closure of approximately 500 North American company-owned locations by the end of fiscal Q4 2025. Additionally, Starbucks will eliminate about 900 jobs as it reduces its non-retail headcount and expenses.
In a separate development, global investment firms Carlyle Group and EQT, along with regional players HongShan Capital Group and Boyu Capital, are preparing final offers for a controlling stake in Starbucks’ China operations. Bidders have valued the China business at up to $5 billion, with most offers reflecting a valuation of approximately 10 times its expected EBITDA for 2025. Meanwhile, TD Cowen has maintained its Hold rating and $95 price target on Starbucks, following the company’s announcement of new turnaround initiatives. These recent developments highlight Starbucks’ efforts to streamline operations and explore strategic opportunities in key markets.
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