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UBS raised its price target on Starbucks (NASDAQ:SBUX) stock to $95 from $90 on Monday, while maintaining a Neutral rating on the coffee chain. The firm cited continued strong brand affinity despite near-term challenges. With a market capitalization of $106 billion and trading at a P/E ratio of 34, InvestingPro analysis suggests the stock is currently trading above its Fair Value.
The price target increase comes as Starbucks faces "traffic and sales choppiness" in the United States due to brand challenges and consumer spending pressure, according to UBS. The research firm expects the company’s "Back to Starbucks" strategy to support improved U.S. transactions and sales growth over time. Despite these challenges, InvestingPro data shows the company maintains a GOOD Financial Health Score, with analyst price targets ranging from $69 to $125.
UBS analyzed data from its Evidence Lab 2025 Global Coffee Survey and QSR Survey to assess changing brand perceptions. Results showed consumers maintain strong brand affinity and high scores on many key brand attributes despite recent challenges.
The analysis revealed declining value perceptions and increased competition in the coffee market have likely impacted Starbucks’ traffic. These findings highlight the importance of the company’s strategic initiatives to improve demand.
UBS will be monitoring the trajectory of progress against Starbucks’ plans and the impact on earnings power in the coming years as the company implements its strategy to address these challenges.
In other recent news, Starbucks has been making significant moves with its financial strategies and service models. RBC Capital raised its price target for Starbucks to $100, maintaining an Outperform rating, citing the company’s accelerated labor deployment as a positive factor for potential top-line growth. Similarly, Citi increased its price target to $95, noting promising signs from test markets in the rollout of Starbucks’ Green Apron Service Model, though it maintained a Neutral rating, highlighting that the broader turnaround will take time. Meanwhile, Goldman Sachs kept its Neutral rating with an $85 price target, following Starbucks’ announcement of price cuts on various beverages in China to remain competitive.
Starbucks plans to introduce a generative AI assistant in 35 locations this month, aiming to enhance service speed and efficiency in its cafes, as part of its broader turnaround strategy. This initiative, showcased at the Leadership Experience event, is expected to be rolled out more broadly in fiscal 2026. TD Cowen maintained its Hold rating with a $90 price target, analyzing potential impacts of labor model changes, including the addition of assistant managers, which could affect earnings per share in the coming years. The firm also expressed concerns about the return on investment for Starbucks’ Green Apron labor model, despite market excitement around its implementation. These developments illustrate Starbucks’ ongoing efforts to adapt its strategies in response to market conditions and investor expectations.
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