Shares of Starbucks (SBUX) climbed to a new 52-week high on Thursday after TD Cowen upgraded the coffee chain, citing confidence that the company’s turnaround strategy and operational changes could drive stronger sales growth and margin recovery in the coming years.
The stock reached $108.88, extending a rally that has pushed shares up 28% year to date.
If the gains hold through the end of the year, it would mark Starbucks’ first annual stock increase since 2021.
Investor optimism has been supported by improving same-store sales trends, continued global expansion efforts, and signs that the company’s “Back to Starbucks” strategy is beginning to stabilize operations after nearly two years of slowing sales.
TD Cowen upgrades Starbucks to buy
TD Cowen upgraded Starbucks shares to buy from hold and raised its price target to $120 from $106, implying roughly 13% upside from Wednesday’s closing price.
The research firm said Starbucks is positioned to benefit from multiple operational and consumer trends that could improve revenue growth and profitability over time.
“Starbucks has numerous tangible drivers to deliver positive sales revisions in a strong category backdrop,” analyst Andrew Charles said Thursday in a note to clients.
“As the company prioritizes labor investments, we forecast margins will recover amid our combined expectations for sales leverage, easing COGS & incentivized non-core cost cuts.”
TD Cowen also projected Starbucks would deliver a 4% increase in same-store sales during fiscal 2028.
That estimate is above Wall Street’s broader consensus forecast of 3.4%, according to the analyst note.
Turnaround strategy gains momentum
Starbucks has been attempting to reverse a prolonged period of weak sales performance that began around 2023.
The company’s turnaround efforts accelerated after management introduced its “Back to Starbucks” strategy, which focuses on revamping marketing initiatives, menu innovation, and customer loyalty programs.
According to TD Cowen, Starbucks remains in the “early innings” of its broader effort to revitalize North American operations.
The analyst noted that sales trends began improving late last year after the company implemented changes aimed at increasing customer engagement and operational efficiency.
Starbucks has also continued investing in labor and store operations as it works to improve service quality and strengthen customer retention.
The company’s ongoing international expansion and continued growth in consumer demand for premium coffee products have also contributed to stronger investor sentiment surrounding the stock.
Wall Street remains divided on outlook
Despite the recent rally and TD Cowen’s bullish call, Wall Street analysts remain mixed on Starbucks’ longer-term outlook.
According to LSEG data, 18 out of 40 analysts covering the company currently maintain buy or strong buy ratings on the shares, while 20 analysts rate the stock as hold.
The divided sentiment reflects lingering concerns over consumer spending trends, labor costs, and the company’s ability to sustain same-store sales growth over the longer term.
Still, the stock’s recent performance suggests investors are becoming increasingly optimistic that Starbucks’ operational reset and brand-focused strategy could help support future earnings growth.
As Starbucks continues implementing its turnaround initiatives, investors will likely remain focused on upcoming sales data, margin trends, and whether the company can maintain momentum in North America while continuing to expand internationally.
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