Starbucks price target raised to $100 from $95 at RBC on labor strategy

RBC Capital raised its price target on Starbucks (NASDAQ:SBUX) stock to $100 from $95 on Wednesday, while maintaining an Outperform rating following the company’s Leadership Experience event. The coffee giant, currently trading at $93.64 with a market capitalization of $106.22 billion, is trading at a relatively high earnings multiple of 33x. According to InvestingPro analysis, the stock appears slightly overvalued at current levels.

The investment firm cited Starbucks’ accelerated labor deployment as a particularly encouraging sign, suggesting management has increased confidence that its new strategy will drive top-line growth. RBC noted that the coffee chain is adding labor hours in all North American stores during the current fiscal year. This initiative comes as the company, which generated $36.3 billion in revenue over the last twelve months, seeks to reinvigorate its growth trajectory.

Prior to the event, RBC observed that investor expectations around Starbucks’ same-store sales growth remained uncertain, with the metric among the most unpredictable in the firm’s coverage universe. Investor sentiment had been cautious regarding fiscal year 2026 earnings per share, with many expecting another investment year.

RBC indicated that the additional labor investment could translate to traffic growth, potentially improving fiscal 2026 earnings expectations. Previously, many investors had anticipated more substantial traffic improvements would not materialize until fiscal 2027.

The firm’s analyst expressed that the first day of the Leadership Experience event represented an "incremental positive" for the company’s outlook, with the labor strategy developments being particularly noteworthy. For deeper insights into Starbucks’ financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and 8 additional key tips about the company’s performance.

In other recent news, Starbucks announced plans to introduce a generative AI assistant in 35 locations this month, with a broader rollout across the U.S. and Canada expected in fiscal 2026. This initiative aims to streamline operations and enhance service speed in cafes. Meanwhile, Starbucks has reduced prices for certain beverages in China to stay competitive, with a focus on increasing sales of non-coffee items during the afternoon. Goldman Sachs maintained its Neutral stock rating for Starbucks, with a price target of $85, noting that while price cuts may boost sales, the overall financial outlook remains unchanged. Conversely, TD Cowen downgraded Starbucks’ stock rating from Buy to Hold, setting a $90 price target due to concerns about earnings potential and market competition. The firm expressed caution regarding Starbucks’ future earnings, highlighting potential challenges such as delayed same-store sales recovery and increased industry competition. However, TD Cowen also reaffirmed a Buy rating later, emphasizing the company’s strategic turnaround efforts and potential for improved profit margins under new CFO Cathy Smith. The company’s focus on operational efficiency and customer satisfaction is seen as a pivotal element in driving future sales growth.

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