UBS: Optimistic about the return of the CEO of Starbucks (SBUX.US) and the company's recovery plan to raise the target price to $94

The Zhitong Finance App learned that later last week, UBS expressed confidence in Starbucks (SBUX.US) CEO Brian Niccol (Brian Niccol)'s plan to “return to Starbucks” and raised the Starbucks target price. Nicole previously led Barbecue (CMG.US) to overcome the loss of customers due to the Escherichia coli outbreak.

UBS wrote in a research report: “Given Starbucks CEO Nicole's past performance and strategic initiatives in operations, marketing, products, and customer experience, we believe [Starbucks'] turn-for-profit plan will gradually drive sales recovery.”

Analysts maintained a “neutral” rating, but raised the target share price to $95, which is slightly above Visible Alpha's average analysts' target share price of $92.64. Starbucks closed at $93.48 on Monday, roughly the same as last week, and shares are up 2.4% this year.

UBS Group found that from 2024 to 2025, there was a “moderate increase” in the number of surveyed consumers planning to visit Starbucks in the coming year. UBS added that when Nicole implements changes that consumers say will make them visit Starbucks more frequently (including adjusting menus and improving service), passenger traffic is likely to increase further.

However, UBS Group admits that business recovery will take some time because American consumers are under pressure, and people generally think that Starbucks products are too expensive. According to a UBS survey, more than 70% of people planning to reduce their Starbucks spending think the chain's prices are too high. Deutsche Bank also found that price was the biggest deterrent in recent customer feedback.

UBS Group said that although Starbucks' brand value awareness has improved, it still lags behind competitors, and is particularly less recognized among high-income people. According to the survey, about 24% of consumers with an annual income of less than $40,000 think Starbucks products are cost-effective, while only 3% of consumers with an annual income of at least $100,000 hold this opinion.

UBS said, “Although we do not expect a significant reduction in menu prices and no significant increase in promotions, we believe that the overall improved customer experience will improve the sense of value and cost performance of the product.”

Niccolo's team also recently held a three-day leadership seminar for Starbucks employees and announced plans to deploy dedicated assistant store managers at most domestic stores.