Starbucks Stock Price Forecast: SBUX at $84.27 as Earnings Miss, $9.46B Sales, and CEO Niccol’s Turnaround Strategy Collide

NASDAQ:SBUX Forecast: Shares at $84.27 as Earnings Miss, Turnaround Strategy, and Legal Risks Shape Outlook

Starbucks Stock Performance Stalls at $84.27 Amid Volatility

Starbucks Corporation (NASDAQ:SBUX) closed at $84.27, down 1.66% on the day, extending a decline that leaves the stock 10.38% lower over the past 52 weeks. The company trades at a market cap of $95.79B, with a trailing P/E ratio of 36.48 and a forward P/E of 31.25, well above restaurant industry averages. Despite its premium valuation, shares have underperformed the S&P 500’s 16.33% gain, reflecting a sharp contrast between resilient revenues and weakening profitability. Trading volume stood at 9.5M, in line with the three-month average, suggesting steady institutional activity without major capitulation.

Earnings Miss Deepens Investor Caution

The most recent quarterly results showed EPS of $0.50, missing consensus estimates by $0.14, marking a 22.5% negative surprise. Quarterly net income plunged to $569.9M, down from $930M in the prior-year quarter, a 47% YoY earnings decline. Revenue of $9.46B did top expectations of $9.29B, up 3.8% YoY, but rising store operating expenses (46.1% of sales versus 42.1% last year) squeezed margins. Analysts now forecast FY2025 EPS at $2.18, down from $3.31 a year earlier, before rebounding to $2.68 in FY2026. This projected 22.9% EPS growth next year underscores optimism in management’s turnaround, though execution risks remain high.

CEO Brian Niccol’s “Back to Starbucks” Turnaround Plan

Starbucks’ turnaround under CEO Brian Niccol, who took the helm with a record compensation package, is centered on resetting the brand’s core identity. The strategy includes:

• Store Redesigns: Over 1,000 North American stores to be redesigned by 2026, lowering build costs by 30% while reintroducing customer-centric layouts.

• Menu Simplification: Cutting 30% of items to reduce complexity, paired with new products like protein cold foam and a 1971 dark roast aimed at reviving heritage branding.

• Operational Automation: Leveraging AI-driven inventory systems and automation to cut wait times and improve order fulfillment.

• Green Apron Service: A new customer experience program emphasizing personalization, handwritten cup notes, and faster in-store service, targeting consistent <4-minute order fulfillment.
  Niccol’s restructuring has already cost $137M in charges, but management argues it will deliver long-term brand revival and efficiency gains.

Legal and Labor Challenges Add to Uncertainty

Beyond earnings, Starbucks faces fresh legal risks. Workers in Illinois, California, and Colorado filed lawsuits alleging the company failed to reimburse dress-code-related expenses, including apparel and accessories, potentially violating state labor laws. These disputes add to ongoing labor tensions, as Starbucks Workers United continues to push for contracts across hundreds of stores. Rising wage and benefit costs—already cited as a margin drag in the last earnings report—remain a structural headwind.

Institutional Activity and Insider Positioning

Institutional investors remain heavily exposed, holding 87.45% of float, with funds like Norden Group LLC increasing their stake by 30% to 39,270 shares ($3.6M value). Short interest sits at 4.02% of float, reflecting moderate bearish sentiment. Insider transactions remain limited, but the payout ratio is stretched at 103.9%, raising questions about dividend sustainability if cash flows fail to recover. Starbucks currently pays an annual dividend of $2.44 per share (2.85% yield), compared with a five-year average yield of 2.14%.

Valuation Measures Signal Premium Risk

Starbucks trades at 2.66x price-to-sales and 20.86x EV/EBITDA, multiples well above peers like McDonald’s (EV/EBITDA 17.3x) and Chipotle (EV/EBITDA 18.5x). With a PEG ratio of 2.71, growth is no longer keeping pace with valuation. Analysts remain split: the consensus target is $98.47, implying 17% upside, while bearish calls, like Jefferies’ $73 price target, suggest further downside risk if execution falters.

International Weakness Weighs on Results

International operations contributed $7.34B in FY2024 revenue, down from $7.49B, with operating profits sliding to $1.06B from $1.23B. Rising promotional activity and higher labor costs eroded margins. In China, once Starbucks’ crown jewel, management is reportedly considering a partial exit or strategic sale valued at $5B, underscoring challenges in a market increasingly dominated by Luckin Coffee (OTCPK:LKNC.Y), now valued at $10.7B.

Comparative Performance vs. Peers

Year-to-date, SBUX shares are up just 5.88%, trailing the S&P 500’s 12.86% gain. Over five years, Starbucks has returned 13.29%, dramatically underperforming the index’s 104.46% rally. Competitors like Dutch Bros (NYSE:BROS) and CAVA Group (NYSE:CAVA) continue to grab market share in niche categories, while McDonald’s (NYSE:MCD) maintains scale leadership with superior margin stability. This relative weakness highlights Starbucks’ precarious position despite its 40,000+ global stores.

Analyst Ratings Remain Divided

Wall Street sentiment on NASDAQ:SBUX is fractured. Baird recently upgraded to “Strong Buy,” citing undervaluation, while Jefferies reiterated “Underperform” with a $73 target. Morgan Stanley, Barclays, and Wells Fargo maintain “Overweight” ratings with price targets clustered around $103–$115. The consensus of Moderate Buy reflects faith in Niccol’s turnaround, but confidence is tempered by recent execution missteps.

Starbucks stock at $84.27 stands at a crossroads: a global brand with 36.7B in annual sales and 2.63B in net income, yet grappling with margin erosion, legal battles, and execution risks. With valuation stretched, institutional buyers holding firm, and real-time trading data signaling consolidation, the verdict leans Hold—awaiting evidence that Niccol’s turnaround can restore profitability and justify a premium multiple.

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