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Like Wall Street, we’re bullish on Starbucks’ long game
A slate of Wall Street firms have raised their price targets on Starbucks (SBUX) on the back of the coffee maker’s standout quarterly report last week and ongoing signs management is doubling down on investing in the business — further highlighting why we’re long-term shareholders in this iconic brand. Barclays on Monday raised its price target on Starbucks to $123 a share, up from $116, while maintaining an overweight rating on the stock. The call came after analysts at the bank met with Starbucks executives, who reportedly painted a bullish picture looking out to fiscal year 2024. “Ongoing investment in both wages [and] equipment has allowed for stores to become more productive while also helping to improve the employment experience for customers,” Barclays analysts wrote in a research note to clients. Indeed, Starbucks subsequently said Monday it plans to raise hourly wages for its U.S. retail workers, or partners, by at least 3% from the start of next year. “With significant ongoing investments of more than $1 billion since last year to uplift the overall partner and store experience, the company has seen a positive shift in hourly turnover rates, which are now below pre-pandemic levels,” Starbucks said in a statement Monday. The move is part of the company’s “Triple Shot Reinvention Plan,” which is being spearheaded by recently appointed CEO Laxman Narasimhan. The plan includes more than $1 billion of investments in employee wage increases, new store equipment to accelerate order flow, digital innovation, and supply chain improvements in fiscal 2024, according to the company. “The focus of the reinvention plan was to elevate the experience in our stores for our partners and through our partners for our customers,” Narasimhan said during a presentation for investors last Thursday. Those comments came on the heels of Starbucks delivering an upside surprise for its fiscal fourth quarter that included strong comparable-store sales growth and excellent margin expansion. The results restored our confidence in Starbucks’ ability to reach its long-term targets, including in China, which remains a key growth market for the coffee chain. “I think Starbucks is now a leader because it has one thing going for it: It has a new CEO, Laxman Narasimhan,” Jim Cramer said Monday. “This is a guy who’s a consumer products guy, who really understands tech,” he added. SBUX YTD mountain SBUX year-to-date performance. Meanwhile, Wedbush on Monday also raised its price target on Starbucks, to $106 a share, up from $100, while reiterating a neutral rating on the stock. RBC Capital raised its price target to $111 a share, up from $99, with a sector perform rating. And Citi on Sunday took its price target to $110 a share, up from $100, maintaining a neutral rating on the stock. Since the coffee giant reported last Thursday before the opening bell, shares have surged more than 13%, to trade around $103.80 apiece. Following the results, we reiterated a 1 rating on the stock, meaning we would be buyers at current levels. (Jim Cramer’s Charitable Trust is long SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Starbucks logo is seen on a cup in this photo taken in the cafe at the airport in Charleroi, Belgium, July 27, 2023.
Jakub Porzyck | Nurphoto | Getty Images
A slate of Wall Street firms have raised their price targets on Starbucks (SBUX) on the back of the coffee maker’s standout quarterly report last week and ongoing signs management is doubling down on investing in the business — further highlighting why we’re long-term shareholders in this iconic brand.
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