Starbucks (NASDAQ:SBUX) moved higher in morning trading on Tuesday after Baid upgraded the restaurant stock to an Outperform rating from Neutral on its view that the turnaround strategy will take hold in the next few quarters, according to Baird.
“We continue to have high conviction that turnaround strategies under new leadership will be effective in transforming Starbucks into a better company, and we expect visibility to this outcome to become increasingly clear over the next several quarters,” updated analyst David Tarantino. “Tangible evidence of progress toward better financial performance should provide a boost to investor sentiment, helping to support elevated valuation metrics on the shares as earnings start to rebound,” he added.
Crucially, Tarantino and his team expect Starbucks (NASDAQ:SBUX) to see an improved comparable sales trend, bolstered by the Seattle-based company’s rollout of its Green Apron Service. On the expense side, Tarantino said visibility has improved on store-level labor investments, and the firm expects to hear details in upcoming quarters on cost savings opportunities, which are seen as being meaningful in areas such as G&A, supply chain, and store-level operating expenses.
Baird hiked its price target on Starbucks (SBUX) to $115.
Shares of Starbucks (SBUX) were up 2.3% in Tuesday morning trading to $93.81.