Starbucks’ (SBUX) new strategy to attract customers is the same as its old one. The coffee chain is ditching its uncomfortable seats and blocked power outlets in an effort to convince customers to stick around after getting their orders. This change brings back the atmosphere its locations were known for before they started becoming places to pick up drinks and leave.
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Encouraging customers to lounge at its stores could result in more sales for Starbucks. That’s how its business operated before, with blue-collar workers and college students using its free Wi-Fi and power outlets to work from laptops. Doing so provides more opportunities for customers to order drinks or food over their extended visits to the coffee chain’s locations.
This change is part of an ongoing process at Starbucks to recapture customers as the business has failed to impress analysts and investors. That’s resulted in a recent string of earnings misses, including missed earnings per share in five of its last eight earnings reports. It also missed revenue estimates in six of its last eight quarters.
Are Analysts Regaining Hope for Starbucks Stock?
Recent coverage of Starbucks has been bullish, with some analysts increasing their price targets for SBUX, or upgrading the shares.
- Five-star Evercore ISI analyst David Palmer reiterated a Buy rating last week and increased his price target to $105 from $95, suggesting a 13.99% upside.
- Four-star Barclays analyst Jeff Bernstein maintained a Buy rating last week and raised his price target to $108 from $98, implying a 17.25% upside.
- Spark, TipRanks’ AI analyst, upgraded SBUX stock to a Buy rating with a $101 price target, representing a possible 9.65% upside.
SBUX stock was up 0.35% in pre-market trading on Monday, extending its year-to-date rally of 2.21%. The shares have also increased 19.42% over the past 12 months.
Is Starbucks Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Starbucks is Moderate Buy, based on 12 Buy and 11 Hold ratings over the past three months. With that comes an average SBUX stock price target of $94.80, representing a potential 2.92% upside for the shares.
