Starbucks Downgraded by Analyst Amid Recovery Concerns

Starbucks stock surged by 28% following Brian Niccol's appointment as CEO, but enthusiasm has since waned as Redburn Atlantic downgraded the stock from 'neutral' to 'sell' and cut the price target from $133 to $77, indicating a potential 22% downside. Analyst Edward Lewis expressed concerns over the high costs associated with Niccol's recovery plans, which include menu simplification and enhancing customer experience. Since 2017, operational costs have consistently outpaced revenue growth, prompting concerns about the company's visibility given its withdrawal of FY2025 guidance. Although Niccol's experience is considered a potential asset, Starbucks has struggled with sustained growth, retracting long-term earnings guidance multiple times. Despite the downgrade, many analysts remain bullish on the stock, with an average target price of $102.38 among 28 brokerages. However, with same-store sales and revenues declining, the path to recovery appears bumpy for the coffee chain.