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Investing.com - Starbucks (NASDAQ:SBUX) maintained its Buy rating from Stifel, which reiterated its $105.00 price target as the coffee giant announced a significant restructuring initiative. Trading at $83.18 with a P/E ratio of 36.12, InvestingPro analysis suggests the stock is currently trading above its Fair Value, despite analyst targets ranging from $73 to $115.
The Seattle-based company unveiled a $1 billion restructuring plan that includes closing stores across North America, resulting in an estimated 1% decline in net unit growth for fiscal year 2025.
Starbucks will eliminate approximately 900 additional corporate positions, following the 1,100 roles it cut in February, as part of efforts to streamline operations and redirect resources toward strategic priorities.
Over the next 12 months, the company plans to remodel roughly 1,000 stores, building on what it describes as positive early results from this initiative.
Stifel noted that while the $600 million cash impact from restructuring charges should have minimal effect on lease-adjusted leverage, U.S. comparable sales continue to face industry-wide pressures in the near term, despite optimism about Starbucks’ innovation pipeline, improved labor deployment, and upcoming Smart Queue technology.
In other recent news, Starbucks Corporation has announced a significant restructuring plan involving the closure of certain coffeehouses and a reduction in its workforce. The company plans to cut approximately 900 jobs as part of broader cost-cutting measures. This restructuring is part of Starbucks’ "Back to Starbucks" strategy aimed at revitalizing its store portfolio and enhancing customer experience. The company also revealed plans to accelerate store closures, projecting a 1% decline in North American net restaurant growth by the end of 2025. This shift represents a significant change from previous growth estimates of 3.5%, with analysts estimating around 500 North American company-owned locations will close in fiscal Q4 2025.
Jefferies has maintained its Underperform rating for Starbucks, citing the $1 billion restructuring cost and an expected decline in North America company-owned units in fiscal year 2025. Meanwhile, TD Cowen has reiterated its Hold rating and $95.00 price target on Starbucks following the announcement of the new turnaround initiatives. In a separate development, Starbucks’ Chief Technology Officer Deb Hall Lefevre has resigned, with Ningyu Chen stepping in as the interim CTO. These developments come as Starbucks aims to improve its financial performance and brand perception amid the ongoing restructuring efforts.
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