Coffee giant Starbucks (SBUX) recently had some challenges posed to its board, particularly since labor costs were surging and there was an increased risk of regulatory blowback accordingly. But Starbucks investors recently elected the full board back in place, suggesting that, perhaps, these concerns were not so grave after all. Starbucks investors also gave the stock a boost, up modestly in Monday afternoon’s trading.
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A coalition of shareholder groups had significant concerns about Starbucks and its labor issues. There certainly have been plenty of labor issues these days, with the unions mounting up and cup writing causing tantrums in some cases. But the coalition wanted broader change, including the removal of Jorgen Vig Knudstorp and Beth Ford. The removal of an “impact committee” also rankled some shareholder groups, who wanted to see it remain in place.
Those changes did not come, and shareholders returned the entire board as-is, reports noted. Starbucks representative Jaci Anderson noted that the board has “…the necessary skills and experience to effectively oversee our strategy, including human capital management.”
“Roller Coaster Stupid”
That board will have a whole new problem to manage, as new word reveals that coffee prices are surging again. The reason behind the surge has little to do with tariffs, reports note. What is causing a surge this time is futures speculators stepping in to send prices surging in the wake of the Iran war. Moreover, weather issues are also delivering their own spin on the matter, and giving coffee prices a bump.
Coffee prices are up 18.4% over the last year, noted federal data. Droughts in Vietnam and Brazil have hit supply hard, and with a 40% tariff on Brazilian purchases, coffee prices mounted further. Throw in surges in coffee futures contracts, and the result is what Emory University professor Peter Roberts calls “roller coaster stupid” prices.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, 11 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After an 11.5% loss in its share price over the past year, the average SBUX price target of $100.26 per share implies 14.37% upside potential.
