Starbucks earns high marks from Deutsche Bank for its new initiatives

Deutsche Bank turned more constructive on Starbucks (NASDAQ:SBUX) on Thursday as it took a positive view on some of the levers being pulled by management.

Analyst Lauren Silberman highlighted that Starbucks (NASDAQ:SBUX) is going all in on labor and the coffeehouse feel to bring the spark back to Starbucks, which the firm thinks is the right strategy to improve its competitive positioning and value proposition.

“SBUX’s employee-first philosophy has been foundational for the brand’s success over the decades, while its focus on the coffeehouse experience should be a key differentiator, noting some of the fastest-growing coffee chains are offering great customer experiences though are also drive-thru only (creating a void for a place to meet and connect),” wrote Silberman.

Looking ahead, Deutsche Bank thinks encouraging Starbucks (SBUX) customers to come back into stores can unlock capacity and reduce bottlenecks in other channels by shifting more customers back to the café from the drive-thru. The expectation is that Starbucks (SBUX) could be more generous with its labor allocation in the near term, with increased transactions and sales to grow into the available labor over time.

Deutsche Bank lifted its price target on Buy-rated Starbucks (SBUX) to $105. Shares of SBUX edged 0.7% higher premarket to $91.69.