Starbucks (SBUX) stock is moving higher out of the gate Wednesday after the world's largest coffee chain beat top- and bottom-line expectations for its fiscal 2025 first quarter.
In the three months ending December 31, Starbucks said its revenue decreased 0.3% year over year to $9.4 billion, driven by a 4% decline in global comparable-store sales. This marked its fourth consecutive quarter of falling same-store sales.
The company's earnings per share (EPS) fell 23.3% from the year-ago period to 69 cents.
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"While we're only one quarter into our turnaround, we're moving quickly to act on the 'Back to Starbucks' efforts and we've seen a positive response," said CEO Brian Niccol in a statement.
"We believe this is the fundamental change in strategy needed to solve our underlying issues, restore confidence in our brand and return the business to sustainable, long-term growth," Niccol added.
The results topped analysts' expectations. Wall Street was anticipating revenue of $9.3 billion and earnings of 67 cents per share, according to CNBC.
Starbucks did not provide guidance for its second quarter or the rest of the fiscal year. In October, the month after Niccol took over as CEO, the company suspended its guidance for 2025 to "allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth."
Is Starbucks stock a buy, sell or hold?
Heading into Wednesday's session, Starbucks shares had generated a 12-month total return (price change plus dividends) of 11%, lagging the S&P 500's 26% gain. And Wall Street has remained on the sidelines when it comes to the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for SBUX is $105.54, representing an upside of just over 5% to the large-cap stock's January 28 close. Additionally, the consensus recommendation is Hold.
Financial services firm Wedbush is one of those with a Neutral rating (equivalent to a Hold) on SBUX stock, along with a $100 price target.
"We believe SBUX's current valuation appropriately reflects limited near-term top- and bottom-line visibility, offset by some level of confidence in management's ability to deliver longer-term annual operating margin expansion and EPS growth in line with the brand's equity," says Wedbush analyst Nick Seytan.
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