<\/p>\n
Starbucks (SBUX) has spent most of the past year attempting to convince Wall Streetthat its turnaround strategy is finally starting to pay off.<\/p>\n
The coffee giant has been slashing costs, restructuring operations and investing extensively in cafe performance after a challenging period of declining traffic, margin pressure and weakening consumer spending trends.<\/p>\n
New CEO Brian Niccol, who took over in 2024, has been working to streamline operations, improve shop execution and speed up service times as Starbucks seeks to stabilize sales growth.<\/p>\n
The corporation is also making tough cuts behind the scenes.<\/p>\n
Starbucks announced intentions recently to cut about 300 U.S. corporate support positions as it looks at more layoffs overseas with its foreign support functions. The company also anticipates about $400 million in restructuring expenses relating to office consolidations, employee separation fees and impairments of assets.<\/p>\n
With such cuts, Starbucks is nevertheless spending significantly to increase staffing levels, caf\u00e9 operations and customer experience.<\/p>\n
Now a big Wall Street boost implies investors might finally be warming to the idea.<\/p>\n
TD Cowen\u2019s positive recommendation comes as Starbucks moves toward a larger goal of $2 billion in gross cost savings by fiscal 2028 while aiming to restore higher profitability across its worldwide company.<\/p>\n
\u201cThe turnaround remains in its early innings,\u201d TD Cowen analyst Andrew Charles wrote after meetings with Starbucks leadership, including CEO Brian Niccol and CFO Cathy Smith.<\/p>\n
TD Cowen sees stronger earnings and margins for Starbucks<\/p>\n
TD CowenupgradedStarbucks to Buy from Hold and increased its price target to $120 from $106.<\/p>\n
The business also boosted its fiscal 2026-2028 earnings-per-share expectations by almost 9% to $2.46, $3.23 and $3.94, respectively.<\/p>\n
Analyst Andrew Charles said conversations with Starbucks management increased confidence in the sustainability of the North America recovery attempt.<\/p>\n
The analyst cited Niccol’s operational track record at Taco Bell as a specific example.<\/p>\n
TD Cowen now sees North America same-store sales growth of 6.1% in fiscal 2026, 5% in fiscal 2027 and 4% in fiscal 2028.<\/p>\n
Those predictions are higher than broader Wall Street expectations.<\/p>\n
The firm also projects consolidated operating margins of 15.1% for fiscal 2028, beyond Starbucks\u2019 long-term target range of 13.5% to 15% and the consensus estimate of 14.6%.<\/p>\n
More Restaurants\u00a0<\/p>\n
30 year old restaurant has closed all restaurantsAfter bankruptcy, Hooters closes restaurants, fights for survivalIconic Las Vegas Strip restaurant closes without warning<\/p>\n
The rising margin expectation for the firm should be supported by a fall in coffee commodity costs, sales leverage and the $2 billion cost savings initiative announced by Starbucks, TD Cowen said.<\/p>\n
Shares rose in premarket trading following the upgrade.<\/p>\n
The upgrade comes at a critical time for Starbucks as the firm tries to juggle dramatic cost cuts with investments to boost customer traffic and store performance.<\/p>\n
Starbucks turnaround key numbers$120: TD Cowen\u2019s new Starbucks stock price target9%:Increase to TD Cowen\u2019s long-term EPS estimates15.1%: TD Cowen\u2019s fiscal 2028 operating-margin forecast$2 billion: Starbucks\u2019 targeted gross cost savings by fiscal 2028$400 million: Expected restructuring charges300: Corporate support roles Starbucks plans to eliminate<\/p>\n
The affected Starbucks employees are in sectors including technology, finance, marketing and research, the Wall Street Journal said.<\/p>\n
The company is also closing regional offices in Chicago, Atlanta, Dallas and Burbank, Calif., while keeping offices in Seattle, New York, Toronto and Coral Gables, Fla.<\/p>\n
Wall Street sees a very different Starbucks emerging<\/p>\n
Photo by Brycia James on Getty Images<\/p>\n
Starbucks stock now faces a major execution challenge<\/p>\n
The question for Wall Street is not whether Starbucks plans to cut costs.<\/p>\n
The challenge is whether those savings can deliver continuous earnings growth without impairing the customer experience that made Starbucks one of the world\u2019s best-known restaurant brands.<\/p>\n
TD Cowen\u2019s revised $120 price target is based on about 30 times estimated fiscal 2028 earnings, indicating the view that Starbucks may be entering its first really regular profitability cycle after several bumpy years.<\/p>\n
That price is significantly above the average multiple of Starbucks historically.<\/p>\n
But the company thinks the premium is justified if it can continue to see same-store sales improving, operational margins growing and corporate spending cleaning.<\/p>\n
Management has also linked executive incentives to long-term savings goals, including a target of delivering at least $800 million in cumulative savings by the end of 2027.<\/p>\n
That puts more strain on execution.<\/p>\n
Meanwhile, Starbucks continues to work its way through a tough consumer climate, as restaurant traffic remains uneven across the industry.<\/p>\n
The company is also contending with higher labor expenses and increasing competition from fast-growing coffee chains and convenience merchants that are expanding into luxury beverages.<\/p>\n
Still, Wall Street seems more and more eager to bet on Niccol\u2019s turnaround strategy.<\/p>\n
If Starbucks can combine higher traffic growth with lower operating expenses, the company\u2019s profit recovery might stretch well beyond the next several quarters.<\/p>\n
That is a tougher possibility for investors to dismiss.<\/p>\n
Related: Starbucks delivers tough update on regional offices, cuts 100s of jobs<\/p>\n
#Starbucks #powerful #Wall #Street #reality #check<\/p>\n","protected":false},"excerpt":{"rendered":"
Starbucks (SBUX) has spent most of the past year attempting to convince Wall Streetthat its…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[259],"tags":[4530,1273,4491,2432,2807,2806],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6722"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6722"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6722\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}