William Blair announced an upgrade to Starbucks Corporation's (NASDAQ:SBUX) stock rating on Thursday, shifting its assessment from Market Perform to Outperform. This decision stems from the anticipation that Starbucks will experience its first positive domestic comparable sales growth in two years during the December quarter. Currently, Starbucks shares trade at $95.81 and carry a price-to-earnings (P/E) ratio of 58.7, which is categorized as high according to InvestingPro data.
The research firm foresees this sales momentum as laying the groundwork for positive full-year comparable sales expansion in fiscal 2026, signaling a marked turnaround following recent operational headwinds. Investors are poised to gain further insight into this trend with Starbucks’ upcoming earnings report scheduled for January 28.
However, margin recovery remains a significant consideration. William Blair highlighted that the Americas segment's operating margins have decreased from 20.8% two years ago to 13.4% in fiscal 2025, compounded by the expectation of an additional $500 million in labor costs for fiscal 2026. Despite these pressures, Starbucks continues to offer a steady dividend yield of 2.59%, having increased its dividend consecutively for 16 years, underscoring its commitment to shareholder returns.
Looking ahead, William Blair projects a rebound in Starbucks' consolidated operating margin to approximate 2023 levels by 2030. This recovery could potentially support a compound annual growth rate of 15% to 20% in earnings per share over the subsequent five years. Based on a 30-times P/E multiple applied to a projected 2030 earnings estimate exceeding $4.70, the firm suggests that Starbucks’ share price could exceed $140 by 2029, with sales growth anticipated to precede significant profit margin improvements. The analysis further indicates that earnings acceleration may become more pronounced starting in 2027.
In corporate developments, Starbucks recently declared a quarterly cash dividend of $0.62 per share, with payment scheduled for February 27, 2026, to shareholders of record as of February 13, 2026. This move reinforces Starbucks' dedication to distributing value to its investors.
Additionally, Starbucks has entered into a joint venture agreement with Boyu Capital for its China retail division, retaining a 40% ownership stake while Boyu Capital will acquire up to 60%, valuing the enterprise at approximately $4 billion.
From the analyst community, BofA Securities has raised Starbucks’ price target to $114 from $106, maintaining a Buy rating while highlighting growth prospects in China’s market. On the other hand, UBS has upheld a Neutral rating with a price target of $94 following the joint venture announcement.
Labor relations present an upcoming challenge as unionized Starbucks baristas plan to conduct a strike in over 25 cities on November 13, coinciding with Starbucks' Red Cup Day, aiming to negotiate a contract. Furthermore, geopolitical developments such as an anticipated executive order by President Donald Trump to reduce tariffs on commodities including coffee could exert influence on Starbucks’ supply chain cost structure.