SBUX Stock Has Rallied Nearly 28% This Year: Why Baird Still Sees 15% Upside For Starbucks?

Baird initiated coverage on Starbucks with an Outperform rating and a $124 target.

• Baird’s new price target implies a 15% upside to Starbucks stock’s last closing price. 
• The firm expects uneven restaurant sales as consumer pressures persist but sees Starbucks benefiting from solid execution and demand. 
• Starbucks’ rally reflects progress under CEO Brian Niccol’s “Back to Starbucks” strategy.

Starbucks Corp. (SBUX) stock ticked higher overnight after winning a bullish call from Baird, which sees the coffee chain as better positioned as investors increasingly separate well-run restaurant brands from weaker operators.

Starbucks stock is headed for a third straight month of gains, having surged nearly 28% so far this year. 

Baird Sees 15% Upside For Starbucks 

Baird launched coverage with an Outperform rating and a $124 price target, implying a 15% upside to the stock’s last closing price. Analyst Chris O’Cull said investors are getting a clearer picture of which restaurant companies have the strongest management teams.

O'Cull said Baird's research, including consumer surveys and mobile-location data, suggests restaurant sales could remain uneven during the third quarter. The firm expects the broader industry to face continued pressure as consumers contend with higher fuel costs, geopolitical uncertainty and financial strain among lower-income households.

The backdrop remains challenging for restaurants, but Baird believes the setup could increasingly reward companies that execute well and maintain strong customer demand. That view gives Starbucks a more favorable setup despite broader weakness across the sector.

Starbucks’ Traffic Rebound Gives Niccol’s Turnaround New Momentum 

The rally in the coffeehouse giant’s stock comes as CEO Brian Niccol’s “Back to Starbucks” strategy shows signs of reversing years of weak traffic and operational pressure.

The turnaround has been supported by a 7.1% increase in comparable U.S. sales in the fiscal second quarter, a 9% rise in revenue to $9.5 billion, faster store operations, and changes to the Starbucks Rewards program. Starbucks has also focused on improving the in-store experience by adding seating, bringing back ceramic mugs, and simplifying operations. 

Also, last week, Starbucks said it is cutting 224 corporate jobs as part of a broader restructuring effort aimed at simplifying the company and reducing costs.

About 120 employees are affected by the company’s decision to move its corporate headquarters from Seattle to Nashville, Tennessee, after they declined relocation offers. Another 104 positions are being eliminated as part of restructuring announced in May.

SBUX Stock: Retail View 

On Stocktwits, retail sentiment around the stock changed to ‘neutral’ from ‘bearish’ territory the previous day. 

SBUX stock has gained over 25% in the last 12 months. 

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