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On Wednesday, JPMorgan revised its price target for Starbucks stock (NASDAQ:SBUX) to $100 from the previous $105, while retaining an Overweight rating. The $96.38 billion coffee chain giant, currently trading at a P/E ratio of 27.37, has seen its stock decline 12.14% over the past six months. According to InvestingPro data, 17 analysts have recently revised their earnings expectations downward for the upcoming period. Starbucks CEO Brian Niccol, who took the helm in September 2024, has initiated a series of strategic changes, including reorganizing his direct reports, slashing 1,100 corporate roles, and eliminating numerous unfilled positions. This move aims to simplify the company’s reporting structures. Despite these challenges, the company maintains a solid dividend yield of 2.88% and has raised its dividend for 15 consecutive years, as noted in InvestingPro’s analysis.
The company has been facing challenges, including staffing shortages during peak hours that have impacted service speed across all channels. Additionally, Starbucks’ menu complexity and gaps have hindered morning operations and failed to meet consumer demands for diverse afternoon beverages. The brand also experienced issues with hastily introduced products and platforms, which lacked thorough testing before hitting the market.
Moreover, Starbucks has been criticized for investing in unnecessary equipment upgrades in stores and deviating from its iconic "third place" coffeehouse atmosphere, which set it apart from both new and established quick-service restaurant (QSR) competitors. JPMorgan’s analyst noted that the company’s past marketing strategies, which focused on discounts and messages that strayed from its core products and services, were also a point of contention.
During a recent call, it was emphasized that the company’s goal is not merely to rebuild but to create a stronger and more efficient business. The statement, "We’re not just building back our business. We’re building back a better business," highlighted the company’s commitment to improvement and growth following the implemented changes. With analyst price targets ranging from $76 to $125, investors seeking deeper insights into Starbucks’ valuation and growth prospects can access comprehensive analysis through InvestingPro’s detailed research reports, which include over 30 additional key metrics and expert insights.
In other recent news, Starbucks Corporation reported its Q2 2025 earnings, which revealed a decline in earnings per share (EPS) to $0.41, missing the forecast of $0.51. The company’s revenue reached $8.8 billion, slightly under the forecast of $8.89 billion. KeyBanc Capital Markets adjusted its earnings projections for Starbucks following these results, revising its EPS forecast for fiscal years 2025 and 2026 to $2.56 and $3.10, respectively. Despite these challenges, Starbucks has been focusing on strategic changes, such as enhancing service times through a labor-centric approach, which it believes will stimulate transaction growth. Evercore ISI also revised its price target for Starbucks, lowering it from $105.00 to $95.00, but maintained an Outperform rating, reflecting confidence in the company’s long-term growth potential. The firm’s analysis suggests that Starbucks could experience an EPS growth rate of over 15% beyond fiscal year 2026. These developments highlight Starbucks’ ongoing efforts to navigate the current business environment while aiming for a multi-year recovery period.
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