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Investing.com - RBC Capital raised its price target on Starbucks (NASDAQ:SBUX) to $110.00 from $100.00 on Wednesday, while maintaining an Outperform rating following the coffee chain’s third-quarter results. The coffee giant, currently valued at $106 billion, has delivered an impressive 25.46% return over the past year, though InvestingPro analysis suggests the stock is slightly overvalued at current levels.
The firm cited positive Q3 performance with North American traffic accelerating 100 basis points, driven by faster service speeds and marketing initiatives. RBC noted that Starbucks is experiencing "broad-based improvement" across its operations, with annual revenue reaching $36.3 billion and maintaining a healthy dividend yield of 2.62%.
The Green Apron test stores are outperforming the total U.S. store base, according to RBC, with the program scheduled for rollout to all U.S. locations in August.
RBC highlighted management’s belief that the company can offset its $500 million incremental labor investment through "durable cost savings" across the profit and loss statement, potentially returning margins to pre-COVID levels over time.
While RBC acknowledged that the pace of margin improvement remains unclear, the firm expressed increased confidence in accelerating top-line growth for Starbucks, which it believes should "eventually translate to material margin expansion." The company currently trades at a P/E ratio of 33.44, reflecting market optimism about its growth prospects despite margin pressures.
In other recent news, Starbucks has been the focus of several analyst updates following its third-quarter 2025 financial results. BMO Capital raised its price target for Starbucks to $115, maintaining an Outperform rating, despite the company reporting earnings per share of $0.50, which missed consensus estimates by $0.15. The shortfall was attributed to one-time investments and discrete tax items, as well as lower equity income and softer comparable sales. Piper Sandler also increased its price target to $105, highlighting an accelerated service model rollout, while maintaining an Overweight rating. UBS raised its target to $100, maintaining a Neutral rating, noting challenges in U.S. same-store sales and traffic trends. Bernstein reiterated an Outperform rating with a $100 target, citing menu innovation and operational progress as positive factors. TD Cowen adjusted its price target to $95, reflecting expectations for lower labor costs and revised earnings estimates for 2026-2028. These developments indicate a mixed response from analysts, with varying price targets reflecting different assessments of Starbucks’ future potential.
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