Coffee chain Starbucks (SBUX) is scheduled to announce its results for the third quarter of Fiscal 2025 on Tuesday, July 29. The company has been struggling, with same-store sales declining for five consecutive quarters amid macroeconomic pressures and a preference for cheaper coffee options in key markets, such as the U.S. and China. Wall Street expects Starbucks to report earnings per share of $0.65, marking a 30% year-over-year decline.
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Revenue is estimated to rise about 2% to $9.29 billion, reflecting contributions from new stores and menu innovation. Despite higher revenue, the company’s bottom line is expected to be impacted by tariffs, higher wages, and inflation.
Analysts’ Views Ahead of Starbucks’s Q3 Earnings
Heading into Q3 earnings, UBS analyst Dennis Geiger reiterated a Hold rating on Starbucks stock with a price target of $95. The analyst sees continued challenges in U.S. traffic and same-store sales trends, with margin and earnings pressures resulting from top-line softness and incremental investments.
Geiger stated that while investor sentiment remains cautious due to persistent sluggish sales trends, elevated investments, and limited visibility into the company’s multi-year earnings power, the stock’s valuation doesn’t seem cheap. The analyst expects a positive inflection in sales trends to occur in Q4 FY25, given easy comparisons and based on a sequentially flat underlying 2-year stack. He believes that a more notable upside would need an acceleration in underlying trends, backed by service model enhancements, marketing, and menu innovation. Geiger slightly lowered his EPS estimates to reflect incremental labor investments. He awaits more visibility into a positive inflection in underlying sales growth and greater earnings power before getting more constructive on SBUX stock.
Meanwhile, RBC Capital analyst Logan Reich reiterated a Buy rating on Starbucks stock with a price target of $100. The analyst stated that SBUX has been one of the most debated names in the restaurant space, as the new CEO looks to turn the business around. He added that key debates into the Q3 results are mainly related to the magnitude of incremental labor investment and the degree to which it will drive traffic. Reich noted that expectations for FY25/FY26 EPS remain low, with investors looking for material margin improvements in FY27.
AI Analyst Is Bullish on Starbucks Stock Ahead of Q3 Print
Interestingly, TipRanks’ AI stock analyst has assigned an Outperform rating to Starbucks stock with a price target of $105, indicating an 11.2% upside potential. According to TipRanks’ AI analysis, Starbucks’ overall stock score reflects strong revenue growth and strategic initiatives aimed at enhancing operational efficiency and consumer experience. However, financial risks due to high leverage, declining margins, and a high valuation temper the positive outlook.
Here’s What Options Traders Anticipate Ahead of SBUX’s Q3 Earnings
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting about a 6.88% move in either direction in SBUX stock in reaction to Q3 results.
Is Starbucks Stock a Buy or Sell?
Currently, Wall Street has a Moderate Buy consensus rating on Starbucks stock based on 13 Buys, nine Holds, and two Sell recommendations. The average SBUX stock price target of $96.24 indicates 1.9% upside potential from current levels. SBUX stock has risen 3.5% year-to-date.
