Starbucks (SBUX) shares could percolate later in 2025 because it brews up higher financial performances under recent CEO Brian Niccol after a difficult 2024, says long-time Starbucks watcher Peter Saleh.
In Saleh’s eyes, a spotlight by Niccol — who took over as CEO in Sept. 2024 — on faster service times, simpler pricing and higher store operations are the ingredients to reestablish Starbucks shares as a top performer.
“We imagine that progress against these initiatives in 2025 will set the stage for outsized same-store sales and earnings growth in 2026 and beyond, catalyzing shares as we progress through the 12 months and that recovery trajectory emerges,” Saleh, the BTIG restaurant analyst, said in note on Thursday.
Saleh slapped Starbucks as one in every of his top first half of 2025 picks, assigning a $115 price goal. The goal assumes about 30% upside from current levels.
The typical sell-side price goal on Starbucks is currently $103, Yahoo Finance data shows.
“We expect 2025 shall be a transition and investment 12 months for Starbucks, as management has suspended guidance, slowed development, and reset operations to engineer a sustainable turnaround,” Saleh wrote, hinting Starbucks rebound won’t be smooth sailing this 12 months.
That notion is underscored by Starbucks’ stretch of less-than-caffeinated financial results.
Starbucks’ most up-to-date quarter showed a 7% drop in global comparable-store sales as consumers shunned the chain’s ever-pricier coffees and long wait times. North America comparable store sales tanked 6%.
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International sales plunged 9%, and Chinese comparable sales cratered 14%. Non-GAAP operating profit margins fell 380 basis points from the prior 12 months to 14.4%.
“I might like to see the foot traffic begin to turn around to drive that same-store sales growth… That is going to be a key piece of the puzzle for us going forward,” Niccol told Yahoo Finance in regards to the US business in a Nov. 4 interview (video above).
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Starbucks shares ended 2024 down 5% in comparison with a 23% advance for the S&P 500. McDonald’s (MCD) shares finished the 12 months up barely.
Starbucks shares — which for years have traded at relative premiums to competitors — trade on a trailing 12-month price-to-sales ratio of two.87 times. That’s below fellow coffee purveyors McDonald’s (MCD), at 8.1 times, and Dutch Bros (BROS) at 4.1 times, in response to Yahoo Finance’s stock comparison tool.
“They obviously got an incredible pick,” Brinker International (EAT) CEO Kevin Hochman told Yahoo Finance about his former Yum! Brands colleague. “He’ll do his normal Brian Niccol magic. And I can not wait to see what they will be about.”