Bernstein SocGen Group has reiterated an Outperform rating on Starbucks Corporation (SBUX) and left its price target at $100.00. The shares are trading near $94.02 and show a price-to-earnings ratio of 78.27, a level the research note states is well above industry norms using InvestingPro data.
In the note, analyst Danilo Gargiulo praised Starbucks' management team, calling the group's strategic execution "best-in-class." Despite that endorsement, Bernstein said it remains "torn on the stock," explaining that for the share price to move materially higher management must present a convincing trajectory for rapid earnings-per-share acceleration at the upcoming investor day.
Bernstein flagged a limited runway for a favorable valuation re-rating. The firm projects Starbucks would likely trade close to 30 times earnings by fiscal year 2028, which it notes would sit at the upper end of the company's historic trading range. InvestingPro metrics cited in the research show Starbucks carrying elevated EBITDA valuation multiples, with an enterprise value-to-EBITDA of 24.28.
Following the company's most recent results, the firm identified a more significant risk that Starbucks will fail to reach an EPS level above $3.75 by fiscal year 2028. Bernstein calculates that hitting that EPS threshold would produce an internal rate of return of roughly 5%, a return it considers adequate to attract further investor interest. The research also points out that nine analysts have recently trimmed their earnings expectations for the upcoming period, according to the comprehensive Pro Research Report for SBUX on InvestingPro.
Starbucks reported first-quarter fiscal 2026 earnings per share of $0.56, below the consensus estimate of $0.59. Management attributed the shortfall in part to ongoing reinvestment in its turnaround strategy, a point echoed by some sell-side firms. Total revenue for the quarter came in at $9.9 billion, beating the $9.7 billion consensus noted in analyst commentary.
Brokerage responses to the quarter were mixed. BMO Capital reiterated an Outperform rating and maintained a $115 price target, linking the EPS miss to the company's continued reinvestment efforts behind its turnaround plan. Goldman Sachs kept its Neutral rating and $100 price target after the results, emphasizing the top-line beat. Jefferies took a different view, raising its price target to $86 from $76 while keeping an Underperform stance, and highlighted improvement in same-store sales as a positive sign.
On the operational front, Starbucks said it will roll out a redesigned tiered rewards program in March. The updated program is expected to deliver enhanced benefits across three membership tiers - Green, Gold, and Reserve - for the company's roughly 38 million active members in North America. Membership benefits will vary based on accumulated Stars, the company said.
Chief Executive Brian Niccol provided forward-looking targets aimed at reinforcing confidence in the turnaround. He projected at least 3% comparable sales growth through fiscal year 2028 and forecast operating margins in a range of 13.5% to 15%. Those targets underpin management's case for sustained recovery in profitability.
Other investor-relevant metrics cited in the note include Starbucks' year-to-date return of 13.0% and a dividend yield of 2.61% at current levels. Bernstein's caution on further valuation expansion reflects its view that absent clearer, faster EPS acceleration, the stock's rich multiple may persist without delivering significant upside.
Market context
The range of broker reactions and recent downward revisions to analyst EPS forecasts illustrate a divide among research providers over the timing and magnitude of Starbucks' recovery in earnings. Bernstein's stance effectively places emphasis on execution risk: management must substantiate faster EPS growth to move the needle on valuation.