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.
-
Trump's Immigration Policies and the Price of Home Healthcare: First 100 Days
President Trump's immigration policies may wallop your pocketbook if you rely on a home healthcare aide.
-
Stock Market Today: Stocks Extend a Quiet Winning Streak
The S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
Stock Market Today: Stocks Extend a Quiet Winning Streak
The S&P 500 Index could actually close April with a monthly gain, which would be an extraordinary sign of market resilience.
-
How Trump's First 100 Days Have Impacted Your Portfolio
President Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
Is It Still Worth It to Gift Savings Bonds?
Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
-
Don't Veer Off Course at the First Sign of a Squall in the Markets
When markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal Diagnosis
The most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your Clients
What financial advisers might need to know to help their clients navigate Social Security in 2025.
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.