Starbucks’ (SBUX) Investor Day on January 29 and fiscal first quarter results the day prior will likely shed light on the company’s efforts to reinvigorate the business under CEO Brian Niccol and momentum behind its “Back to Starbucks” initiative.
Analysts are expecting to see improving sales trends, cost savings, and for Investor Day, a focus on FY26 guidance and 3-year targets.
“We believe the event could be a positive catalyst for shares given recent sales momentum,” UBS analyst Dennis Geiger said in a note to clients.
More immediately, fiscal first quarter results could show the first domestic comparable sales gain in two years, which should set the brand up for a return to positive full-year comparable sales gains in FY26, says William Blair’s Sharon Zackfia.
She expects 1% comp gains (versus +2% consensus estimates) for the first quarter and 2% growth for the full year (versus 3% estimates), translating into continued improvement in two-year comp trends, while UBS projects a more optimistic increase of 3% to 4% in comp sales for the first quarter. This likely reflects improved operations, effective marketing, easier comparisons to previous quarters, contributions from the holiday menu, and a “notable” uplift from recent store closures.
However, the bigger question for investors at this point is margin recovery.
Zackfia cites the 13.4% decline in Americas margin in FY25 before half a billion dollars of incremental labor expenses expected in FY26 for continued concerns over profitability.
UBS’s Geiger also sees margin pressures extending in the near to medium term, reflecting increased labor hours, rollout of the Assistant Store Manager program, and investments in the Green Apron service model.
Offsets should come in the form of cost savings as well as supply chain efficiencies, improving transaction and sales growth, all of which are “key factors” to strengthening margins.
“We continue to believe the ‘Back to Starbucks’ plan should support a sales and earnings recovery,” Geiger says, with tailwinds from store closures and existing and new sales initiatives supporting U.S. same store sales inflection and momentum going forward.
Zackfia sees a path to consolidated operating margin recovery “within spitting distance of 2023 levels by 2030, implying a 15% to 20% EPS CAGR over the next five years,” she notes.
Accordingly, Geiger maintains his Neutral rating on Starbucks (SBUX) until there is better visibility into the recovery trajectory in sales growth, margin improvement, and earnings upside.
William Blair’s Zackfia, however, upgraded the coffee chain to Outperform from Market Perform to reflect the “optimism already baked in given the stock’s 15% year-to-date increase.”
“We believe a credible case exists for the stock to reach more than $140 by 2029, assuming a 30x P/E multiple off a 2030 estimate of more than $4.70, implying the opportunity for a ~10% CAGR in share appreciation over the next four years,” she notes.
Shares of Starbucks Corp. (SBUX) are up 1.5% on Friday, adding to a 15% gain since the beginning of 2026.