Shares of Starbucks Corp. (SBUX) have gained 7.8% over the past five days. The specialty coffee retailer recently announced plans to replace its plastic and paper cups with reusable cups in six markets initially.
Notably, U.S. and Canadian customers will be served drinks in either personal or Starbucks-provided reusable cups for every visit by 2025.
The move is part of the company’s plan to reduce waste by 50% by 2030. Thus, after undertaking a test and learn approach, Starbucks has arrived at this solution.
It is also introducing its new Starbucks Partner Waste and Recycling App to educate partners about unique store recycling guidelines. The app will also provide store-specific information and notifications, a sorting guide, and the option to create store-specific signage for partners and customers.
Furthermore, Starbucks is also launching a new pilot program with Volvo to electrify the driving route from the Colorado Rockies to the Starbucks Support Center in Seattle. Also, Volvo EV chargers will be made available at 15 Starbucks stores in order to fulfill its renewable energy and decarbonization projects.
Takeaway
Starbucks’ efforts to switch from single-use cups to reusable ones is expected to help contain rising costs to some extent as disposable cups and lids amount to about 40% of the company’s packaging waste, according to a CNBC article. However, it is less likely to be an easy transition for customers.
Price Targets
Following the news, JPMorgan analyst John Ivankoe upgraded Starbucks’ rating to a Buy from a Hold with a price target of $101, implying 15.6% upside potential from current levels.
Also, Stephens analyst James Rutherford maintained a Buy rating on the stock with a price target of $125 (43% upside potential).
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 14 Buys and 10 Holds. The average Starbucks price forecast of $116.22 implies 33% upside potential to current levels.
Positive Investor Sentiment
Based on the activity of 574,101 investors, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Starbucks, with 11.4% of portfolios having increased their exposure to SBUX stock over the past 30 days.
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