Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - TD Cowen reduced its price target on Starbucks (NASDAQ:SBUX) to $84.00 from $88.00 on Friday, while maintaining a Hold rating on the coffee chain’s stock. The stock, currently trading at $80.56 with a market capitalization of $91.54 billion, is hovering near its 52-week low of $75.50. According to InvestingPro analysis, the stock is currently fairly valued.
The firm cited early concerns that the anticipated sales turnaround is not materializing alongside the company’s protein product launch, contrary to market expectations. This aligns with InvestingPro data showing modest revenue growth of 0.59% over the last twelve months, while nine analysts have revised their earnings expectations downward.
TD Cowen adjusted its valuation multiple to 23x from 24x FY2 P/E applied to its previously lowered 2028 earnings per share estimates, positioning the multiple between Starbucks’ 3-year and 5-year averages.
The research firm expressed a favorable view of CEO Brian Niccol, noting that investors appear willing to give him time until the February 2026 investor meeting, and acknowledged the company’s increased focus on restructuring and closing underperforming stores to maintain profitability.
These positive factors are balanced against several concerns, including the likelihood of negative EPS revisions, limited visibility for a return to normalized restaurant development of 5% or higher, and a more challenged balance sheet.
In other recent news, Starbucks Corporation announced a modest increase in its quarterly dividend, raising it from $0.61 to $0.62 per share. This marks the company’s fifteenth consecutive annual dividend increase, with an annualized rate now at $2.48 per share. Additionally, Starbucks unveiled a $1 billion restructuring plan that will involve closing some stores across North America, leading to an estimated 1% decline in net unit growth for fiscal year 2025. In light of this restructuring, Stifel has maintained its Buy rating on Starbucks, while Jefferies reiterated an Underperform rating, citing the restructuring costs as a concern. Meanwhile, Starbucks’ Chief Technology Officer, Deb Hall Lefevre, has stepped down, with Ningyu Chen appointed as interim CTO. These developments reflect the company’s ongoing strategic adjustments and leadership changes.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.