TD Cowen has upgraded Starbucks from hold to buy, raising its price target from $106 to $120, which suggests a potential upside of 13% based on the stock's closing price on Wednesday. Analyst Andrew Charles highlighted that Starbucks has several factors that could lead to positive sales revisions, particularly as the company focuses on labor investments.
This strategy is expected to help recover margins alongside anticipated sales growth and reduced costs. TD Cowen projects a 4% increase in same-store sales for fiscal year 2028, surpassing the consensus estimate of 3.4%. Starbucks is in the early stages of revitalizing its North American operations after experiencing a sales decline that began in 2023.
The company has started to reverse this trend with its "Back to Starbucks" plan, which aims to enhance marketing, menu innovation, and customer loyalty, contributing to a 26% rise in shares year-to-date. If this performance continues, it would mark Starbucks' first annual gain since 2021.
Notably, TD Cowen's optimistic outlook contrasts with the broader market sentiment, as only 18 out of 40 analysts currently recommend buying the stock, with 20 maintaining a hold rating