SBUX: Turnaround Plans And Store Closures Will Shape Earnings Recovery Amid Labor Strikes

The analyst consensus price target for Starbucks has been revised downward to $94 from $100, as analysts cite concerns about slower sales momentum and a challenging industry environment despite ongoing turnaround efforts.

Analyst Commentary

Recent analyst notes on Starbucks reflect a mix of cautious optimism and ongoing concerns as the company navigates an uncertain operating landscape. The following is a summary of the main bullish and bearish takeaways highlighted in their updates.

• Some bullish analysts point to sequential improvements in store traffic, indicating initial signs that turnaround strategies are having a positive impact despite macroeconomic challenges.
• Solid performance in key segments, including a recent beat in same-store sales both in North America and internationally, is seen as a positive signal for underlying demand and operational execution.
• Menu innovation and improved service have contributed to stronger U.S. trends, suggesting that investments in customer experience could pay off over time.
• Analysts remain encouraged by ongoing portfolio restructuring and cost reduction efforts. These are viewed as necessary steps to support long-term profitability and a return to more robust transaction growth.

• Bearish analysts cite limited visibility into cost savings initiatives, which increases concerns about whether margin pressures can be adequately addressed in the near term.
• Ongoing reductions in FY26 earnings forecasts reflect expectations for slower sales growth and persistent inflation, both of which could weigh on future profitability.
• Some see a "messy" investment setup, with upcoming store closures and weaker overall industry demand clouding the outlook. Certain product launches also face uncertainty.
• There are tempered expectations for rapid progress on strategic initiatives. Analysts warn that turnaround efforts may deliver only gradual improvement against a backdrop of broader industry headwinds.

What's in the News

• Unionized Starbucks baristas are launching a wave of strikes in at least 40 cities. More than 1,000 workers at 65 cafes are expected to participate in walkouts to pressure the company over union contract talks (Bloomberg).
• U.S. lawmakers have urged Starbucks to resume contract discussions with its workers' union. Over 100 members of Congress have signed a letter to the company advocating for fair negotiations (Reuters).
• Starbucks is slowing new store expansion and closing hundreds of cafes in response to falling same-store sales. This has created tension with landlords as the company steps back from some custom-built locations (Financial Times).
• Boyu Capital has emerged as the leading contender to take a majority stake in Starbucks' China operations in a deal that could exceed $4 billion. There is potential for other major investors to join the venture (Bloomberg).
• Starbucks CEO Brian Niccol reports that the fall product lineup helped drive record-breaking sales in U.S. stores. This reinforces the impact of menu innovation on customer demand (Bloomberg).

Valuation Changes

• Consensus Analyst Price Target has decreased from $94.17 to $94.10, reflecting a marginal downward revision in fair value estimates.
• Discount Rate has declined slightly from 8.95% to 8.93%, indicating a modest reduction in perceived risk for future cash flows.
• Revenue Growth projections have increased modestly, rising from 5.58% to 5.68%.
• Net Profit Margin forecasts are up from 9.27% to 9.49%, suggesting a slightly improved profitability outlook.
• Future P/E multiple has dropped from 34.85x to 33.29x. This signifies a somewhat more conservative valuation of future earnings.