Starbucks: Stabilization and Turnaround Narrative Support Buy Rating Despite EPS Challenges

Brian Harbour, an analyst from Morgan Stanley, maintained the Buy rating on Starbucks. The associated price target remains the same with $95.00.

Brian Harbour has given his Buy rating due to a combination of factors including the stabilization of Starbucks’ US sales and a broader turnaround narrative that shows promise. Despite some challenges with earnings per share (EPS) being a wildcard and ongoing labor investments weighing on earnings, the stability in US sales is seen as a positive indicator for the stock.
Harbour acknowledges that while the current price target does not suggest significant upside, the clarity in Starbucks’ vision and recent management incentives point towards a longer-term turnaround. The company’s efforts in labor investments are expected to yield benefits in the long run, and the anticipated acceleration in US comparable store sales in the fourth quarter could drive further stock upside. Overall, the combination of these factors supports the Buy rating, even as the stock may remain range-bound until there is improved earnings visibility.

In another report released on July 11, Stifel Nicolaus also maintained a Buy rating on the stock with a $105.00 price target.