It might be the province of uncharitable souls to suggest that coffee giant Starbucks (SBUX) is desperate, but its latest move does lean a bit that way. Starbucks turned to former CEO Howard Schultz to support the efforts of current CEO Brian Niccol. Investors, meanwhile, called this a worthwhile strategy. They sent shares surging nearly 3.5% in Monday afternoon’s trading.
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Schultz recently made an appearance at a meeting in Seattle. The meeting was recorded, and Bloomberg got a copy of that recording. Schultz told employees, “There has to be a sense of urgency about the work,” and also encouraged them to get behind Brian Niccol’s plans for Starbucks, even the return-to-office mandates. Schultz declared: “We can’t afford to do this part-time. We have to commit to the company.”
Leaving aside the obvious logical failings like assuming it is impossible to be committed, full-time, and partially remote, there does seem to be an element of desperation at work here. Starbucks has just seen six straight quarters of sales declines, reports note, and that is enough to light a fire under anyone who has a stake in the operation.
Too Little, Too Late?
But there are already some darker signs ahead, with some calling out Starbucks, wondering if its problems may actually be too big to fix. The early days of Starbucks called for Starbucks to treat coffee like a craft, and create some truly impressive pieces therein. The market reacted accordingly, and soon, a frenzy of new locations followed. Starbucks locations opened with such alarming regularity that some made jokes about a new Starbucks location opening up inside a second, larger Starbucks location.
Times changed, however, and the difference between what customers wanted and what they got changed. Starbucks’ plan to go back to the past to revive what made it great is a good idea on paper, reports suggest, but whether or not it will work for the “modern audience” is in question.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 17.6% rally in its share price over the past year, the average SBUX price target of $100 per share implies 11.43% upside potential.
