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In just over a year since Brian Niccol took the helm as CEO, Starbucks (SBUX) has faced increasing challenges, dimming the prospects of the company's ambitious "Back to Starbucks" initiative aimed at revitalizing growth. Launched with urgency, the plan was intended to spark renewed customer engagement and operational efficiency. But consumer behavior has shifted more than Starbucks expected. Visits remain soft, and same-store sales continue to slip.
Bernstein, however, is betting on patience and precision. The firm believes Starbucks’ multi-year investment in labor — estimated between $1.5 billion and $2 billion over two years — will lay the groundwork for recovery.
Bernstein expects North American traffic to remain negative through 2025 before improving in 2026. By 2027 to 2028, same-store sales could climb 5%, with EBIT margins reaching 19% in North America and more than 15% company-wide.
The firm sees SBUX stock potentially doubling from its post-second-quarter lows, fueled by more than 20% EPS growth and a premium multiple. Even after a 15% rebound, Bernstein expects another 35% upside over the next two years.
About Starbucks Stock
Starbucks is the world’s leading roaster and retailer of specialty coffee with more than more than 38,000 stores across the globe. With a market capitalization of $107 billion, it operates under several familiar banners such as Starbucks Coffee, Teavana, Seattle’s Best Coffee, and Ethos.
SBUX stock’s recent performance reflects renewed investor attention. Over the past 52 weeks, shares have risen 24%, including a 9% jump in just the past month.
The stock trades at 38 times forward adjusted earnings and 2.9 times sales, both valuations sitting above industry averages. That reflects investor confidence in the company’s future earnings power.
Income-seeking investors will find further appeal in Starbucks’ dividend record. The company pays an annualized forward dividend of $2.40 per share, offering a yield of 2.55%. It has raised its dividend for 14 consecutive years. The most recent payout of $0.61 per share was distributed on May 30 to shareholders of record as of May 16.
Starbucks Misses on Q2 Earnings
Starbucks announced its fiscal 2025 Q2 results on April 29, but the report did little to inspire confidence. Revenue came in at $8.76 billion, up 2.3% year-over-year (YOY) but short of the $8.82 billion Wall Street was expecting.
The same-store sales picture offered no relief, falling 1% during the quarter. The U.S. — the company's largest market — saw a 4% dip in transactions. While China managed a 4% increase in transaction volume, that was neutralized by a 4% drop in average ticket size, highlighting a shifting consumer dynamic in both markets.
Starbucks made a deliberate pivot during the quarter. It scaled back on expanding cold-brewing equipment to instead pour more resources into labor, a move it believes will generate more meaningful gains in order throughput and customer experience.
The decision, however, has come at a cost. Adjusted operating margin contracted sharply, down 460 basis points to 8.2%. Net income declined 50.3% YOY to $384.2 million. EPS plunged 50% YOY as well to $0.34 and failed to meet analysts’ forecast of $0.48.
Still, CEO Brian Niccol remains confident. Niccol called the plan the right one, not just for near-term stabilization but also for unlocking long-term opportunity.
Forecasts reflect the current turbulence. Analysts expect third-quarter EPS to fall 31% YOY to $0.64. For fiscal 2025, the projection drops 25% to $2.48. A rebound is penciled in for fiscal 2026, with EPS expected to climb more than 20% to $2.99.
What Do Analysts Expect for Starbucks Stock?
Bernstein continues to back SBUX stock with an “Outperform” rating and has raised its price target from $90 to $100. The firm sees strengthening visibility around Starbucks’ labor initiatives, margin stabilization, and earnings recovery as catalysts that could drive long-term upside.
Evercore ISI analyst David Palmer has followed suit, lifting his target price from $95 to $105. The revision reflects growing confidence in Starbucks’ ability to execute through current headwinds. Both analysts align on one point: the turnaround is progressing, even if the financials have yet to fully catch up.
The broader analyst community holds a “Moderate Buy” view. Of the 32 analysts covering the stock, 15 have issued a “Strong Buy” rating, two rate it as a “Moderate Buy,” 12 call the stock a “Hold," one has marked it as a “Moderate Sell”, and two classify SBUX under “Strong Sell.”
SBUX stock is already trading above its average price target of $91.50 yet still has a runway to climb. The Street-High target of $108 suggests a potential climb of 14% from current levels.
