Starbucks (SBUX) Is Up 5.1% After Joint Venture With Boyu Capital in China Has the Bull Case Changed?

• Starbucks recently announced an agreement with Boyu Capital to form a joint venture that will operate Starbucks' retail business in China, with Boyu holding up to a 60% stake and Starbucks retaining a 40% interest while licensing its brand and intellectual property to the entity.
• This move positions Starbucks to leverage Boyu’s insights into Chinese consumer behavior while accelerating innovation, digital expansion, and its presence in one of the world's largest coffee markets.
• We’ll explore how the new joint venture with Boyu Capital in China could impact Starbucks’ investment narrative and growth outlook.

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Starbucks Investment Narrative Recap

To own Starbucks stock, you need to believe in its global brand strength and the long-term potential of its international growth strategy, particularly given its focus on innovation and expansion in key markets like China. The recent joint venture with Boyu Capital aligns with this narrative, but it does not materially alter the most important short-term catalyst, execution of operational improvements in its core U.S. and international businesses. At the same time, margin pressure from higher labor and operational costs remains the biggest risk to watch.

The latest earnings announcement is especially relevant against the backdrop of the new agreement in China. While revenue grew year-over-year, Starbucks experienced a pronounced drop in net income, underscoring ongoing profitability challenges that put a spotlight on execution and margin recovery as the most immediate investment themes. How this all plays out, particularly in a market as important as China, will be key, but concerns around sustained pressure on Starbucks’ operating margins mean investors should stay focused on ...

Read the full narrative on Starbucks (it's free!)

Starbucks' outlook anticipates $45.5 billion in revenue and $4.6 billion in earnings by 2028. This is based on an assumed annual revenue growth rate of 7.5% and an earnings increase of $2.0 billion from the current $2.6 billion.

Uncover how Starbucks' forecasts yield a $94.17 fair value, a 9% upside to its current price.

Exploring Other Perspectives

Thirteen members of the Simply Wall St Community placed Starbucks’ fair value between US$49.80 and US$110, revealing dramatically different outlooks. With cost pressures front of mind, consider how the company’s margin trajectory could shape future performance and explore alternate views to inform your position.

Explore 13 other fair value estimates on Starbucks - why the stock might be worth as much as 27% more than the current price!

Build Your Own Starbucks Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Starbucks research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.
• Our free Starbucks research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Starbucks' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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