Starbucks (SBUX) stock rose about 2% on Tuesday after Robert W. Baird analyst David Tarantino upgraded the coffee giant’s rating to Buy from Hold. Also, he raised the price target to $115 (23.3% upside) from $100. The Top analyst is optimistic that the company’s new leadership and turnaround strategy will be effective and that tangible signs of improvement will become visible over the next few quarters.
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Tarantino believes that this progress will boost investor sentiment, which, combined with a projected rebound in earnings, should support a higher valuation for the shares.
Following the stock’s recent underperformance, down 18.8% over the past six months versus a 4.2% gain in the S&P 500 (SPX), the analyst now views SBUX stock’s risk-reward profile as more attractive.
Previously, Tarantino held a Hold rating on the stock due to concerns over weak comparable sales, which impacted earnings projections for fiscal years 2025 and 2026.
SBUX’s Rebound Efforts
Under CEO Brian Niccol, who joined Starbucks after a successful tenure at Chipotle (CMG), the company is making efforts to increase seating capacity, improve service speed, and roll out innovations like the Green Apron Service model, which focuses on human connection and personalized customer experiences.
Starbucks is also expanding its menu with items like protein cold foam beverages and upgrading its bakery offerings. Further, the company is investing $500 million into improving store staffing, while also looking for ways to cut costs in its supply chain and other general expenses.
Is Starbucks a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, nine Holds, and two Sells assigned in the past three months. The average Starbucks stock price target of $100.61 per share implies a 7.87% upside potential.
