Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Piper Sandler maintained its Overweight rating and $102.00 price target on Starbucks (NASDAQ:SBUX) stock Monday. The coffee giant, currently trading at $91.78 with a market capitalization of $104.25 billion, is trading near its InvestingPro Fair Value, suggesting the stock is fairly priced at current levels.
The research firm expressed bullishness on Starbucks despite ongoing investor debates about the company's ability to improve store operations and the timeline for these improvements. Piper Sandler's analysis focuses on the coffee chain's trajectory over the next 12 to 18 months rather than immediate operational concerns. InvestingPro data shows the company maintains a FAIR overall financial health score, with particularly strong marks in profitability metrics. Get access to 8 more exclusive ProTips and comprehensive analysis with InvestingPro.
Piper Sandler noted that Starbucks management has explicitly stated it sees significant unit growth opportunity in the U.S., despite skepticism from some investors. This skepticism stems partly from the emergence of smaller competing coffee chains in the market.
The research firm highlighted management's stated desire to restart successful menu innovation at Starbucks as a potential driver of same-store sales. While new management hasn't specifically mentioned the Energy category, Piper Sandler suggests investors should consider this area.
The firm's maintained Overweight rating comes amid investor questions about Starbucks' operational improvement costs, consensus estimate accuracy, and current stock valuation.
In other recent news, Starbucks Corporation has secured a new $3 billion revolving credit facility set to mature in 2030, replacing a previous agreement from 2021. This facility, involving major financial institutions like Bank of America, Citibank, and Wells Fargo (NYSE:WFC), allows Starbucks to borrow up to $3 billion, with an option to increase by $1 billion, and sets specific financial covenants for the company. Additionally, UBS has adjusted its price target for Starbucks to $95, reflecting expectations of brand strength despite market challenges. The firm maintains a Neutral rating, highlighting potential growth in China and the impact of the "Back to Starbucks" strategy on U.S. sales. TD Cowen also reiterated its Hold rating with a $90 price target, noting potential earnings impacts from labor model changes. The firm expressed concerns about the return on investment for Starbucks' Green Apron initiative, despite some investor optimism. Meanwhile, Starbucks CEO Brian Niccol met with U.S. Health and Human Services Secretary Robert F. Kennedy Jr. to discuss the company's menu plans, focusing on the avoidance of artificial ingredients. These developments indicate Starbucks' strategic moves to strengthen its financial position and brand image amid evolving market conditions.
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