Baird said that visibility on the transformation at Starbucks will become increasingly clear over the next several quarters.
Starbucks (SBUX) saw a stock upgrade from brokerage Baird to ‘Outperform’ from ‘Neutral,’ citing that the turnaround strategies under new CEO Brian Niccol will transform the coffee chain into a better company.
Shares of Starbucks were up 2.3% in early trading on Tuesday. Baird also raised its price target to $115, up from $100, according to TheFly.
Retail sentiment on the stock remained unchanged in ‘bearish’ territory, with chatter at ‘extremely low’ levels, according to data from Stocktwits.
The coffee chain is undergoing an overhaul under Niccol, who has outlined the “Back to Starbucks” plan, looking to bring back the heritage coffeehouse culture.
Baird said that visibility on the transformation at Starbucks will become increasingly clear over the next several quarters. The brokerage believes the company’s better financial performance will boost investor sentiment and support elevated valuation metrics on the shares.
In late July, CEO Niccol laid out plans for a reset aimed at returning the firm to its coffee house roots, including plans to uplift several stores that had experienced dwindling sales over several quarters due to slowing traffic at their outlets. He noted that the company still has a chance to fulfill existing demand by addressing the excessive out-of-stock levels, and the supply chain team is actively working on it.
Starbucks stock has gained nearly 2% so far this year and has declined over 2% in the last 12 months.
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