Starbucks Stock Downgraded As Turnaround Will Need More Time, Analyst Says – CoffeeTalk

Starbucks (SBUX) is facing challenges in the coming months, according to Jefferies analyst Andy Barish. Barish downgraded shares of the coffee giant to Underperform and lowered his price target to $76, citing uncertainty over the next 12 months following the “big run” in the past six weeks since Chipotle’s (CMG) Brian Niccol was named CEO. Since August 1, shares have increased nearly 30% to around $95. Barish expects the stock to stall here and begin to retrace the ‘Niccol gains’ as fundamentals become more of the focus.

Niccol, who began in the new role on Sept. 9, has signaled that changes are to come, but changes will be challenged by bigger issues like operations, culture, value perception, and technology. He expects fiscal fourth quarter and fiscal year 2025 guidance to “disappoint,” with EPS growth in the low single digits and same-store sales declining.

Barish called 2025 a “throwaway” year in which Starbucks attempts to reinvest and stabilize the business so it may rebound in fiscal 2026 and beyond. In an open letter, Niccol said he’s been spending time in stores and with employees since he was announced as CEO on Aug. 13, 2024.

Last quarter, same-store sales declined 2% in the US, possibly due to the insipid reception of its pumpkin spice debut. Barish noted that “cost-reductions” during former CEO Laxman Narasimhan’s tenure run could help earnings.

In the latest quarterly results, the company reaffirmed its 2024 guidance, which it revised following Q2. The company expects 2024 global revenue growth in the low-single digits, down from the previous range of 7% to 10%. Global and US same-store sales are expected to see a low single-digit decline or stay flat, down from the previous range of 4% to 6% growth.

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