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Key Takeaways
- Shares of coffee chain Starbucks have outpaced the S&P 500 this year, rising as investors are signaling some hope that the company’s turnaround plan is working.
- Two events this week—quarterly financial results and an investor day—could help extend that run.
Starbucks stock has been percolating all year. You might even say it’s finally hot.
Coffee quips aside, shares of Starbucks (SBUX) are showing sustained signs of life for the first time since the aftermath of the hiring of CEO Brian Niccol in late summer 2024. While they’re still off those post-hire highs, they’ve risen about 14% so far this year, easily outstripping the S&P 500. The stock, currently trading at around $96, is near its highest level in 10 months.
Could this continue? Two events this week could help answer that question.
Why This Matters to Investors
Starbucks was for years a beloved stock that consistently rose on the back of steady growth. Now investors are looking for signs that its CEO can deliver on an ambitious turnaround plan. The shares have climbed this year, and two big events—earnings and an investor day—could give them another lift.
Its fiscal first-quarter financial results are due Wednesday morning. An investor day event, set to feature comments from Niccol and other executives, is slated for a day later. They follow a previous round of quarterly results that included same-store-sales trends suggesting that the company’s “Back to Starbucks” turnaround plan was bearing fruit.
Meantime, Starbucks has continued to roll out menu changes and other announcements as it looks to again convince customers that its cafes are the kind of places they want to sit and spend. Recent menu announcements include alcoholic cocktails as well as protein drinks, baked goods, and a new chai recipe.
Wall Street’s price target for Starbucks shares, based on Visible Alpha’s mean, is right around current prices—a sign that analysts may be looking for clear-cut reasons to get more optimistic. But there are signs of bullishness out there already: Bank of America on Monday moved its target on the shares up slightly to $120, the highest tracked by Visible Alpha.
“We expect the market to pay a higher multiple on temporarily depressed earnings given our view that [the company’s] brand remains fundamentally strong and that significant opportunities for improvement lie in reallocating resources,” the analysts wrote.
