Starbucks price target maintained at $95 by UBS on China outlook

UBS maintained its Neutral rating and $95.00 price target on Starbucks (NASDAQ:SBUX) Wednesday, citing expectations for gradual improvement in the coffee chain’s China business into fiscal year 2026. According to InvestingPro data, Starbucks currently trades at $91.59, with analyst targets ranging from $69 to $125 per share.

The investment firm noted that Starbucks continues to face pressure in China from depressed consumer spending and competition from local peers. China represents the company’s second-largest market globally with approximately 8,000 stores currently operating. With a market capitalization of $104 billion and annual revenue of $36.3 billion, Starbucks maintains a prominent position in the global coffee market.

UBS anticipates Starbucks will likely pursue a partnership in China, potentially selling a stake in its business there. Such a move would bring local expertise, new relationships, and more focused marketing resources to fuel growth in the region. InvestingPro analysis reveals that while Starbucks operates with moderate debt levels, its short-term obligations currently exceed liquid assets, making strategic partnerships particularly valuable.

The firm believes Starbucks’ "Back to Starbucks" initiatives, solid brand positioning, improving value perceptions including price reductions, menu innovation, and digital/loyalty contributions should support sales and margin progress in China.

A potential partnership could help Starbucks reach its targeted footprint of approximately 20,000 stores in China over time, enabling the company to capture long-term growth while reducing operating leverage and various risks, as well as supporting increased focus on its U.S. business, according to UBS.

In other recent news, Starbucks has secured a new $3 billion revolving credit facility set to mature in 2030. This agreement involves prominent financial institutions like Bank of America, Citibank, and Wells Fargo (NYSE:WFC), with Bank of America acting as the Administrative Agent. The facility allows Starbucks to borrow up to $3 billion, with a potential increase of up to $1 billion, and replaces a previous agreement from 2021. On the analyst front, RBC Capital raised its price target for Starbucks to $100, citing confidence in the company’s accelerated labor strategy aimed at driving top-line growth. Meanwhile, Citi increased its price target to $95, noting promising signs from the rollout of the Green Apron Service Model, which is expected to improve same-store sales. UBS also adjusted its price target to $95, acknowledging strong brand affinity despite challenges in the U.S. market. TD Cowen maintained its $90 price target, analyzing the impact of Starbucks’ labor model changes on future earnings. These developments highlight Starbucks’ ongoing strategic initiatives and financial maneuvers.

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