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TD Cowen reiterated its Hold rating and $90.00 price target on Starbucks (NASDAQ:SBUX) Wednesday, analyzing potential impacts of the coffee chain’s labor model changes. The global coffee giant, with a market capitalization of $106.6 billion and annual revenue exceeding $36 billion, currently trades at $93.65. According to InvestingPro analysis, the stock appears slightly overvalued at current levels. The firm’s analysis suggests adding assistant managers to approximately 80% of cafes without one by mid-2026 would impact earnings per share by $0.06 in 2026 and $0.13 in 2027, if implemented.
Starbucks shares have risen 10% since TD Cowen’s downgrade on May 29, which the firm attributes to improving near-term alternative data for Starbucks North America. Investor expectations for the company’s fiscal third quarter ending June 2025 range from -1% to -2%, more optimistic than the -2.3% Consensus Metrix projection. InvestingPro data shows analyst price targets ranging from $69 to $125, with the company maintaining a GOOD financial health score despite trading at a relatively high P/E ratio of 33.8x.
The firm noted its published estimates already incorporate the rollout of Starbucks’ Green Apron labor model. A key assumption in TD Cowen’s analysis is that the assistant manager position represents a promotion within the new labor structure rather than an additional employee added to the model.
Market excitement has grown around Starbucks’ accelerated Green Apron implementation, with some investors anticipating meaningful sales improvements from the initiative. TD Cowen expressed concern about the return on investment for this program, however.
The firm’s proprietary survey data indicated deteriorating value perceptions among Starbucks customers, which TD Cowen believes could challenge the company’s pricing power moving forward. For deeper insights into Starbucks’ valuation metrics, growth potential, and comprehensive financial analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Starbucks has been the focus of multiple analyst updates and strategic developments. Citi has increased its price target for Starbucks to $95, citing the accelerated rollout of the Green Apron Service Model, which aims to enhance staffing and improve service. Meanwhile, RBC Capital raised its price target to $100, highlighting Starbucks’ labor strategy as a positive indicator for future growth. This strategy involves increasing labor hours across North American stores, which RBC believes could boost traffic and improve earnings expectations for fiscal 2026.
Goldman Sachs has maintained a Neutral rating on Starbucks with an $85 price target, following the company’s decision to reduce prices on select beverages in China. This pricing strategy is designed to remain competitive amid a cautious consumer spending environment. Additionally, Starbucks plans to introduce a generative AI assistant in 35 locations this month to improve service speed, with a broader rollout planned for fiscal 2026. This AI initiative is part of Starbucks’ larger turnaround efforts to streamline operations and enhance customer service.
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