Shares of Starbucks ( SBUX ) could trickle down later in 2025 as it delivers better financial performance under new CEO Brian Niccol after a challenging 2024, says longtime Starbucks watcher Peter Saleh.
In Saleh’s eyes, Niccol’s focus — who took over as CEO in September 2024 — on faster service times, simpler pricing and better store operations are the ingredients to restore Starbucks shares to top performers.
“We believe that progress against these initiatives in 2025 will set the stage for outsized same-store sales and earnings growth in 2026 and beyond, catalyzing share prices as we progress through the year and that recovery path unfolds ,” says Saleh, BTIG’s restaurant analyst. said in a note Thursday.
Saleh named Starbucks one of his top picks for the first half of 2025, with a price target of $115. The target assumes an upside of about 30% from current levels.
The average sales target for Starbucks is currently $103, Yahoo Finance data shows.
“We expect 2025 to be a transition and investment year for Starbucks as management has suspended guidance, slowed development and reset operations to achieve a sustainable turnaround,” Saleh wrote, noting that Starbucks’ recovery this year will not be smooth sailing.
That idea is underscored by Starbucks’ less-than-caffeinated financial results.
Starbucks’ most recent quarter saw a 7% decline in global comparable store sales as consumers shun the chain’s increasingly expensive coffees and long wait times. Comparable store sales in North America decreased by 6%.
International sales fell 9%, and comparable Chinese sales fell 14%. Non-GAAP operating profit margins decreased 380 basis points from the prior year to 14.4%.
“I would like to see traffic start to turn around to drive same-store sales growth… That’s going to be an important piece of the puzzle for us going forward,” Niccol told Yahoo Finance of the U.S. business. Interview on November 4 (video above).
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Shares of Starbucks ended 2024 down 5%, compared with a 23% rise for the S&P 500. Shares of McDonald’s (MCD) ended the year slightly higher.
Shares of Starbucks – which have traded at relative premiums to peers for years – trade at a trailing-twelve-month price-to-sales ratio of 2.87 times. That’s less than fellow coffee suppliers McDonald’s (MCD) at 8.1 times, and Dutch Bros (BROS) at 4.1 times, according to Yahoo Finance’s stock comparison tool.
“They obviously made a great choice,” Kevin Hochman, CEO of Brinker International (EAT), told Yahoo Finance about his former Yum! Brands colleague. “He’s going to do his normal Brian Niccol magic. And I can’t wait to see what they’re about.”