As Starbucks on Tuesday posted fiscal second-quarter earnings that missed the bar , most analysts cut price targets but maintained a generally bullish stance on the coffeemaker. CEO Brian Niccol tried to raise investors’ hopes by pointing out that the Starbucks turnaround strategy — which includes investing more in labor and scaling back automation plans — is already showing success. In its last quarter, the company earned an adjusted 41 cents per share on $8.76 billion in revenue. That was lower than the 49 cents per share and revenue of $8.82 billion that analysts polled by LSEG had penciled in. “Our financial results don’t yet reflect our progress, but we have real momentum with our ‘Back to Starbucks’ plan,” he said in a video posted on the company’s website. “We’re testing and learning at speed and we’re seeing changes in our coffeehouses.” On the company’s Tuesday earnings call, Niccol added: “At this stage in our turnaround, [earnings per share] shouldn’t be used as a measure of our success.” Shares of Starbucks were last trading nearly 7% lower. Overall, Here’s what analysts at some of the biggest shops on Wall Street had to say on the report. Goldman Sachs downgrades shares to neutral from buy, cuts price target to $85 from $103 Analyst Christine Cho’s new target implies upside of less than 1% from Tuesday’s close. “We are yet to witness a meaningful improvement in net purchase intentions with the majority of drivers still in decline in March 2025 vs. Sept 2024, with challenges running across various consumer demographics. Placer foot traffic data and our proprietary quarterly survey of 2k consumers suggest some signs of stabilization, but not sufficient to indicate a reversal to market share gains vs. peers in the coffee category.” Bernstein reiterates outperform rating but lowers price target to $90 from $105 Bernstein’s forecast corresponds to upside of around 6%. “Management couldn’t have been louder on kitchen sinking: ‘EPS should not be used as a measure of success.’ Said differently, this transformation needs time and investors should expect compressed margins and sales. While painful to witness, the stock reaction during the earning call suggests that the re-baselining reality is sinking in among investors, and it could provide a great entry point into a more de-risked stock.” Morgan Stanley keeps overweight rating, decreases price target to $95 from $105 Morgan Stanley’s target calls for 12% upside going forward. “More of a quarter for the bears, as US comp trends remain soft (i.e., negative), and EPS comes down again — more labor is the plan, weighing on P & L. Strategy still seems right to us, but a reminder that this will take time, and patience may be limited in this market.” Deutsche Bank maintains overweight rating, reduces price target to $97 from $112 Analyst Lauren Silberman’s forecast is 14% above Starbucks’ Tuesday closing price. “We acknowledge visibility into near-term numbers is low, though we believe SBUX is making the right investments for the business long term, supporting our high conviction in the success of the turnaround as well as the potential upside to the run-rate earnings power, and we continue to see SBUX as among the best multi-year growth stories in restaurants.” Barclays keeps overweight rating, cuts price target to $98 from $106 Analyst Jeffrey Bernstein’s price target was approximately 15% higher than Starbucks’ closing price on Tuesday. “We believe CEO Niccol has the qualities & experience to lead the global turnaround, and that coupled with a refreshed leadership team (most recently with a newly named CFO), should successfully reinvigorate the brand. But to be clear, the ‘Back to SBUX’ turnaround will take time, and in a slowing macro, the ‘green shoots’ will likely be tempered.” Wells Fargo reiterates overweight rating, $100 price target Wells Fargo’s target equates to 18% upside. “FQ2 was expectedly weak. US comp -2% missed, forward financial detail was sparse, and macro/commodity/tariff headwinds linger. But we suspect Q2 represents peak turnaround disruption, and robust initiatives suggest a gradually better path forward.” JPMorgan maintains overweight rating, lowers price target to $100 from $105 Analyst John Ivankoe’s price target implies upside of 18%. “Fixing past mistakes takes time, and money. Recovery under way — but modeled benefits delayed. Brian Niccol has been in the CEO seat just since September 2024. Since then, he has made numerous changes to his direct reports as well as a reduction of 1,100 corporate jobs and eliminating several hundred open and unfilled positions to flatten reporting structures.”
