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
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.
-
How to Stay Safe During Summer Storms: What to Know About Lightning Risks
Learn how to protect your home, electronics, and personal safety from lightning strikes this summer — plus what your insurance might cover.
-
Ask the Editor — Tax Questions on Disaster Losses and more
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on paper checks, hurricane losses, IRAs and timeshares.
-
Why Smart Retirees Are Ditching Traditional Financial Plans
Financial plans based purely on growth, like the 60/40 portfolio, are built for a different era. Today’s retirees need plans based on real-life risks and goals and that feature these four elements.
-
To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around You
While thinking about succession planning might feel like anticipating a landslide (here's to you, Fleetwood Mac), there are strategies you can implement to manage the uncertainty and the transition.
-
Stock Market Today: S&P 500, Nasdaq Near New Highs
The S&P 500 hasn't hit a new high since February. It's been since December for the Nasdaq.
-
The Bull Case for the Second Half of 2025
This strategist sees a volatile market segueing to a strong close this year.
-
7 Essential Investing Rules We All Should Know
The best time to start investing is right now. That's just one vital rule investors should be familiar with. Here are six more.
-
These Are the Key Tariff Issues to Watch in Coming Months
While they're not dominating headlines right now, tariffs are not over. Some key dates are coming up fast that could upend markets all over again.
-
Technology Unleashes the Power of Year-Round Tax-Loss Harvesting
Tech advancements have made it possible to continuously monitor and rebalance portfolios, allowing for harvesting losses throughout the year rather than just once a year.
-
The Fiduciary Firewall: An Expert's Five-Step Guide to Honest Financial Planning
Armed with education and awareness, you can avoid unethical people in the financial industry by seeking fee-only fiduciaries and sharing your knowledge with others.