Analyst Andrew Strelzik from BMO Capital maintained a Buy rating on Starbucks and keeping the price target at $115.00.
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Andrew Strelzik has given his Buy rating due to a combination of factors, primarily focusing on Starbucks’ strategic decision to form a joint venture with Boyu Capital for its China business. This move is seen as a strategic rebalancing that reduces the company’s exposure to the volatile Chinese market while allowing it to concentrate more on its core U.S. operations. The joint venture is expected to help Starbucks de-risk from China, reduce capital intensity, and focus on enhancing its U.S. market priorities such as improving throughput, customer experience, and margin recovery.
Despite the transaction being slightly dilutive to earnings per share, the overall financial impact is considered manageable, especially if the proceeds are used for share buybacks. The partnership with Boyu Capital is also expected to accelerate Starbucks’ growth in China through innovation and expansion, balancing the company’s growth opportunities in the region with the evolving competitive landscape. Strelzik maintains an optimistic view on Starbucks’ medium-to-long-term growth trajectory under new leadership, despite some near-term earnings pressures.
Strelzik covers the Consumer Cyclical sector, focusing on stocks such as Brinker International, Darden Restaurants, and Domino’s Pizza. According to TipRanks, Strelzik has an average return of 3.7% and a 53.17% success rate on recommended stocks.
In another report released today, Wells Fargo also maintained a Buy rating on the stock with a $100.00 price target.