Starbucks Positioned for Growth Amidst Challenges: Buy Rating Affirmed by Analyst

Analyst Zachary Fadem of Wells Fargo maintained a Buy rating on Starbucks (SBUX – Research Report), retaining the price target of $100.00.

Zachary Fadem’s rating is based on a combination of factors that suggest Starbucks is positioned for potential growth despite current challenges. He acknowledges the concerns around the company’s labor investments and soft Q3 comparisons, but he remains optimistic due to expected easing in Q4 comparisons and margins. Fadem highlights that the costs associated with returning to 2019 staffing levels, estimated at $520 million, are offset by various strategic measures such as faster service, zero-based budgeting, and general and administrative cost reductions.
Additionally, Fadem notes that Starbucks has opportunities to mitigate labor cost pressures through increased North American cooperative sales, restructuring efforts, and pausing certain capital expenditures. The company’s focus on efficiency, leadership changes, and technological updates are also seen as positive steps. Despite short-term pressures, Fadem believes that Starbucks’ long-term strategies, including its new labor model and international expansion potential, provide a solid foundation for future growth, warranting a Buy rating.

In another report released yesterday, Bernstein also maintained a Buy rating on the stock with a $90.00 price target.