The turnaround seems to be taking hold at coffee giant Starbucks (SBUX). Certainly, there are hiccups, like trying to convince anyone that a $9 cup of coffee is an “affordable premium experience” rather than “catastrophically overpriced.” But some analysts believe that the turnaround still has room to run, and shares could go higher from here. Investors took that ball and ran with it, sending Starbucks shares up over 2% in Thursday afternoon’s trading.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
TD Cowen analyst Andrew Charles, who has just over a four-star rating on TipRanks, noted that Starbucks has the potential to add a 4% increase in same-store sales in fiscal year 2028. Given that Wall Street looks for Starbucks to only post a 3.4% increase, TD Cowen is being a bit more optimistic. Starbucks’ moves to revitalize North American operations are still in “early innings,” so further gains are reasonably likely. In fact, if current gains keep holding, Starbucks would see its first annual gain since 2021.
Charles noted, “Starbucks has numerous tangible drivers to deliver positive sales revisions in a strong category backdrop. As the company prioritizes labor investments, we forecast margins will recover amid our combined expectations for sales leverage, easing COGS & incentivized non-core cost cuts.”
The AI Assistant That Always Watches
Starbucks is turning to artificial intelligence “assistants” that are supposed to handle things like keeping recipes in shape and monitoring inventory levels. But workers are surprised to discover that the systems are also watching workers.
The system is not being used to record conversations, but it is being used to track employees’ “friendliness,” as measured by specific words and phrases. The use of those phrases is subsequently reported back to managers, and ostensibly used in promotion, raise, and firing decisions.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 17 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 21.42% rally in its share price over the past year, the average SBUX price target of $110.48 per share implies 2.9% upside potential.
