RBC maintains Starbucks stock Outperform with $115 target

Published 29/01/2025, 10:10
© Reuters.

On Wednesday, RBC Capital Markets sustained their positive outlook on Starbucks Corporation (NASDAQ:SBUX) shares, maintaining an Outperform rating and a $115.00 price target. The coffee giant, currently valued at $114 billion, is trading near its 52-week high of $103.32, with InvestingPro analysis suggesting slight overvaluation at current levels. For deeper insights into Starbucks’ valuation metrics and growth potential, InvestingPro offers comprehensive analysis with 12+ additional exclusive tips. The firm’s assessment followed Starbucks’ first-quarter results, which presented a mixed picture but overall positive developments, particularly in the North American market.

Starbucks reported first-quarter sales that slightly exceeded expectations, with same-store sales (SSS) outperforming by 83 basis points. This performance was attributed to ongoing changes within the North American operations, signaling a positive trend. The company’s strong market position is reflected in its $36.2 billion in revenue and impressive dividend track record, having raised dividends for 15 consecutive years, currently yielding 2.43%. Additionally, the company noted improvements in the Chinese market, which has been a focus area for growth.

Despite these positive indicators, the company’s Chief Financial Officer (CFO) provided a margin outlook for 2025 that fell short of analyst expectations. Furthermore, potential savings from supply chain efficiencies might not meet prior estimates, and the company is bracing for the impact of green coffee inflation on its channel development segment.

RBC analysts adjusted their estimates in light of the new information but reiterated their Outperform rating, indicating a confidence in Starbucks’ revenue drivers. The setup for the company’s stock appears attractive, especially considering the lowered earnings per share (EPS) expectations, which may provide room for upside surprises. The stock has shown strong momentum with a 35% price increase over the past six months, though it trades at a relatively high P/E ratio of 30.12. The firm’s commentary suggests that, although there are challenges ahead, the strategic initiatives Starbucks is implementing could lead to sustained growth and profitability. InvestingPro subscribers can access the full research report, including detailed financial health scores and expert analysis of Starbucks’ growth trajectory.

In other recent news, Starbucks has been the focus of several significant developments. UBS analyst Dennis Geiger lifted the price target for Starbucks to $105, maintaining a neutral stance. The adjustment followed Starbucks’ first-quarter earnings, which displayed robust same-store sales and a slight increase in margins and earnings. Stifel analysts also displayed optimism, raising the stock price target to $114, despite anticipating a 6.0% decline in U.S. comparable sales for the fiscal first quarter. Deutsche Bank (ETR:DBKGn) reiterated its Buy rating for Starbucks shares, indicating a slight decline in customer concerns over pricing.

Starbucks’ "Back to Starbucks" initiatives are gaining traction, with management predicting positive U.S. and global comparable sales in the second quarter. However, earnings per share are expected to face significant pressure in the second quarter due to investments and restructuring charges. Meanwhile, Alshaya Group, a Kuwait-based conglomerate, paused discussions regarding the sale of a stake in its Starbucks Corp . franchise.

Starbucks has also been the subject of discussion due to potential tariffs on Colombian exports, with TD Cowen and Stifel analysts suggesting varying impacts on Starbucks’ financials. These recent developments provide investors with insights into Starbucks’ operational and financial landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.