Starbucks Posts Earnings Beat: New CEO Will 'Fix The Business The Right Way,' Analyst Says

Shares of Starbucks Corp SBUX were climbing in early trading on Wednesday after the Seattle-based company reported upbeat fiscal first-quarter earnings.

Here are some key analyst takeaways.

• Goldman Sachs analyst Christine Cho maintained a Buy rating, while raising the price target from $109 to $111.
• Wedbush analyst Nick Setyan reiterated a Neutral rating,
• Bank of America Securities analyst Sara Senatore reaffirmed a Buy rating and price target of $120.
• Piper Sandler analyst Brian Mullan maintained an Overweight rating and price target of $110.
• RBC Capital Markets analyst Logan Reich reiterated an Outperform rating and price target of $115.
• Stifel analyst Chris O’Cull reaffirmed a Buy rating and price target of $114.
• Oppenheimer analyst Brian Bittner maintained a Perform rating on the stock.

Check out other analyst stock ratings.

Goldman Sachs: Starbucks reported its fiscal first-quarter earnings at 69 cents per share. That’s modestly ahead of the consensus of 67 cents per share. Total revenues beat the consensus by around 1%.

The decline in same-store sales was less than expected. Operating margins were in-line with estimates, "driven by supply chain and in-store efficiencies," Cho said in a note.

"Although still in early stages, we believe the company is focusing and investing in the right places to drive a meaningful turnaround in its North American business," the analyst wrote. With several initiatives in place, the company's same-store sales growth could turn "modestly positive" in the fiscal second quarter, "with further sequential improvements" in the second half of the year, she added.

Wedbush: Starbucks recorded a 4% decline in U.S. same-store sales, better than expectations of a 5.2% decline, Setyan said. The 4% decline in international same-store sales and 6% decline in China same-store sales were also better than consensus of declines of 5.8% and 8.3%, respectively, he added.

The company's performance in the fiscal first quarter shows signs of stabilization, suggesting "flat-to-positive [same-store sales] growth earlier than expectations," the analyst stated. This is against easier comps and the "heavy lifting remains," Setyan added.

BofA Securities: Starbucks' underlying comp improvement through the fiscal first quarter "seems to have carried into" the second quarter, Senatore said. The company's year-on-year earnings growth could trough in the second quarter, she added.

"Growth should improve sequentially through 3Q and 4Q as positive comps offset moderating investments (which are accelerated in 2Q)," the analyst wrote. Although Starbucks has not guided to positive year-on-year growth in the back half of the year, earnings growth could turn "slightly positive," she further stated.

Piper Sandler: Starbucks U.S. same-store sales of down 4% was better than expectations and represents an almost stable sequential trend for two years, Mullan said. If the company maintains this performance, U.S. same-store sales could turn positive in the fiscal second quarter. That’s sooner than what the consensus currently expects, he added.

Management aims to simplify the menu and reduce around 30% of items in both food and beverages by the end of 2025. This reaffirms the thesis that the new CEO, Brian Niccol, is going to "fix the business the right way,” the analyst stated.

Starbucks appointed Niccol CEO last August.

RBC Capital Markets: The ongoing changes to Starbucks' North America business "are starting to show signs of improvement," while the performance is also improving in China, Reich said.

CFO Rachel Ruggeri suggested lower supply chain cost savings than previously expected.

"While the core business appears to be moving in the right direction, the company expects earnings to remain pressured, as restructuring costs, higher SBC, and potentially lower efficiency-driven cost savings are NT headwinds to margins," the analyst wrote. Some of these headwinds could be temporary and cost savings from the initiatives may begin to materialize "toward the end of the fiscal year and into 2026," he further stated.

Stifel: "We are encouraged by the progress the company is making to get ‘Back to Starbucks’ and expect comps to return to positive territory as early as F2Q25," O'Cull wrote in a note. Several initiatives are underway, including reintroducing the brand to non-loyalty members, new order sequencing to eliminate bottlenecks and optimizing staffing levels, he added.

Management expects earnings to trough on a year-on-year basis in the fiscal second quarter, "impacted by seasonality and organizational restructuring," the analyst stated. Earnings should improve in the back half of the year, both sequentially and year-on-year basis. Analysts expect the company's overall margin performance "to follow a similar pattern," he further wrote.

Oppenheimer: Management expects global same-store sales to turn positive in the fiscal second quarter. The Street's current estimate is a 1.2% decline, Bittner said. This is likely to be "driven primarily by North America," he added.

“Trends appear to be bottoming under Brian Niccol’s leadership, with a favorable setup as comparisons ease,” the analyst stated.

The Oppenheimer team struggles to identify a clear path for same-store sales, margin, and EPS upside now baked into “fiscal ’26E consensus estimates."

Price Action: Shares of Starbucks had risen by 6.83% to $107.27 at the time of publication on Wednesday.

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