Is Wall Street Bullish or Bearish on Starbucks Stock?

Seattle-based Starbucks Corporation (SBUX) operates as a roaster, marketer, and retailer of coffee worldwide. Its stores offer coffee, tea, and various food products. With a market cap of $110.3 billion, Starbucks operates through North America, International, and Channel Development segments.

Starbucks has trailed the broader market by a wide margin over the past year. SBUX stock is up 1.8% in 2024, lagging behind the S&P 500 Index’s ($SPX) 19.6% returns on a YTD basis. SBUX has gained 4.9% over the past 52 weeks, compared to SPX’s surge of 36.9% during the same time frame.

Narrowing the focus, Starbucks has also underperformed the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 10.1% returns on a YTD basis and 30.4% gains over the past 52 weeks.

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The coffee giant has continued to face intense competition, rising costs, and weakened demand over the past years, which has led to the stock plummeting 16.4% over the past three years. However, recently, its stock prices skyrocketed 24.5% after the announcement of Brian Niccol’s appointment as Starbucks’ CEO on Aug. 13. Given Niccol’s impressive corporate track record, investors showcased massive confidence in his ability to manage Starbucks.

SBUX stock rose marginally after the release of its fiscal 2024 earnings on Oct. 30. The company has continued to observe a drop in comparable store sales, which was offset by new store openings and an increase in average ticket. Its North America and U.S. comparable store sales declined 2%, while China's comparable store sales declined 8% compared to the previous fiscal.

Moreover, despite Starbucks’ total net revenue surging by 55 basis points to $36.2 billion, it missed Wall Street’s topline expectations. Its operating margins have continued to contract due to high store operating and other expenses, leading to its non-GAAP operating income dropping 6.8% year-over-year to $5.4 billion.

For the current fiscal year, ending in September 2025, analysts expect Starbucks to report a 3.3% year-over-year growth in adjusted EPS to $3.42. The company’s earnings surprise history has been mixed. It missed analyst’s earnings estimates twice over the past four quarters while matching on two other occasions.

SBUX stock has a consensus “Moderate Buy” rating overall. Among the 27 analysts covering the SBUX stock, 16 recommend a “Strong Buy,” one suggests a “Moderate Buy,” eight advise a “Hold,” one advocates a “Moderate Sell,” and one gives a “Strong Sell” rating.

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This configuration is more bullish compared to three months ago when 10 analysts recommended “Strong Buy” ratings.

Stifel analyst Chris O’Cull lowered the firm's price target on SBUX to $105 from $110 while maintaining a “Buy” rating on Oct. 23, after Starbucks pre-released preliminary Q4 results.

The mean price target of $102.20 represents a premium of 4.6% to current price levels. However, the Street-high target of $120 suggests a potential upside of 22.8%.

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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.