What's Behind Starbucks Stock's New Sell Rating?
Starbucks stock has rallied hard since Brian Niccol was tapped as the coffee chain's new CEO, but one analyst thinks turnaround plans will be costly.


It's been a hot-and-cold year on the price charts for Starbucks (SBUX) stock. Shares trended lower until mid-August when news that former head of Chipotle Mexican Grill (CMG) Brian Niccol would become the coffee chain's new CEO sparked a big swing higher. The stock is up more than 32% since then and back in positive territory for the year to date.
However, not everyone is convinced the recent rally will continue, with one analyst arguing that despite Niccol's successful track record, Starbucks stock is a Sell.
Specifically, Redburn Atlantic analyst Edward Lewis downgraded Starbucks stock to Sell from Neutral (equivalent to Hold) and assigned a $77 price target, according to MarketWatch.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Lewis said the downgrade came after reviewing the company's "Back to Starbucks" plan, which includes changes such as reintroducing the coffee condiment bar, ceramic mugs and more comfortable seating in its stores, simplifying pricing, adjusting the menu and adding more staff during its busiest hours.
"Our chief concern is the cost Starbucks must incur to deliver this recovery," Lewis said. "With shares trading above a 20-year average price-to-earnings multiple, there is little room for error."
The analyst believes the costs of Niccol's plan is not currently reflected in analysts' earnings estimates for Starbucks, which means the consumer discretionary stock is overvalued at current levels.
Lewis' $77 price target sits more than 20% below where Starbucks' is presently trading.
Where do other analysts stand on Starbucks stock?
Despite Starbucks' longer-term troubles on and off the price charts, most of Wall Street remains bullish on the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for SBUX is $102.38, representing implied upside of nearly 4% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Stifel is one of those with a Buy rating on Starbucks, along with a $110 price target.
"In our opinion, Mr. Niccol delivered his [turnaround] message with a level of clarity and precision that is typically the hallmark of a talented leader who knows how to focus an organization on solving the right problems," wrote Stifel analyst Chris O'Cull in an October 30 note.
O'Cull admits that the next few quarters will be "challenging" for Starbucks, but he is "encouraged by the cohesiveness of [Niccol's] plan, and the potential for the initiatives to meaningfully improve the guest experience and the trajectory of the business over time."
He anticipates the second half of fiscal 2025 "should yield meaningful evidence the strategy is working."
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
What Trump Has Done With Social Security So Far
Since President Trump was sworn into office on January 20, he has proposed or initiated changes impacting how Social Security functions, including closing offices and offering buyouts. Here's a roundup.
By Kathryn Pomroy Published
-
What Trump Has Done With Medicare So Far
Since President Trump was sworn into office on January 20, he has proposed or initiated changes impacting Medicare. Here's a roundup.
By Kathryn Pomroy Published
-
10 Tax Topics Every Retiree Should Know About
A little knowledge can go a long way toward saving on your tax bill. Print this out and take it to your tax planner so you can have a productive chat.
By Michael Miller Published
-
It's No Surprise That Berkshire Hathaway's in the 100,000% Return Club
Warren Buffett's fascination with the insurance industry has helped Berkshire Hathaway's stock return snowball.
By Louis Navellier Published
-
4 Turnaround Stocks to Consider – and 2 More to Keep an Eye On
A turnaround stock is a struggling company with a strong makeover plan that can pay off for intrepid investors.
By Nellie S. Huang Published
-
Facing a Layoff? Ask Your Employer These Questions Now
If you're being laid off or forced into early retirement, don't make any decisions without proper guidance — and that starts by asking some key questions.
By Ben Maxwell, ChFC®, AAMS® Published
-
Stock Market Today: Dow Jumps 674 Points in Friday's Relief Rally
The gains weren't limited to stocks, though, with gold futures closing above the $3,000 per ounce mark for the first time.
By Karee Venema Published
-
Have $1M+ Saved? Consider a Financial Planning One-Stop Shop
A 'one-stop shop' team — including a financial planner, estate planning lawyer, CPA and more — could serve all of your tax, estate and retirement planning needs.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Stock Market Today: Stocks Drop on Trump's EU Tariff Threats
The White House said alcohol imports from the European Union could soon face tariffs of 200%.
By Karee Venema Published
-
Five Ways to Safeguard Your Portfolio in Market Downturns
The stock market is nothing if not volatile these days. When it takes a dip, a well-managed, properly diversified portfolio could help you ride out the storm.
By Joel V. Russo, LUTCF Published