Starbucks (SBUX) has received a new Hold rating, initiated by Mizuho Securities analyst, .
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Mizuho Securities has given its Hold rating due to a combination of factors impacting Starbucks’ market position and growth outlook. The company holds a significant share of the U.S. retail coffee market, but its growth trajectory has shifted from robust revenue and EPS growth to challenges such as North American unit closures and competitive pressures in China. The decline in Starbucks’ market share in China, due to cheaper alternatives, and the relative value proposition in the U.S. have contributed to this cautious stance.
While Starbucks is expected to benefit from store closures in terms of same-store sales growth, the issue of higher pricing compared to peers remains a concern. Internationally, the visibility of growth is limited, with competitive pressures affecting average check sizes in China. Although there are some positive signs, such as transaction growth in China, the overall outlook remains uncertain. Additionally, ongoing cost-cutting measures and labor issues, such as unionization, add to the uncertainty, making it difficult to assess long-term growth rates. These factors collectively support the Hold rating with a price target of $84.