Starbucks’ China Deadlock Resolves In 2 Possible Ways

Summary:

• Starbucks’ new CEO, Brian Niccol, is making swift changes but faces challenges in revitalizing the stagnant Chinese market amid intense local competition.
• A potential joint venture in China could help Starbucks leverage local resources, expand its footprint, and return to growth in the region.
• Despite promising developments, Starbucks’ current valuation at 32x forward PE suggests that the market has already priced in these expectations.
• Given the uncertainties and current valuation, I maintain a Hold rating on Starbucks, pending concrete developments in its Chinese market strategy.

Investment Thesis

Come December 9th this year, Brian Niccol will only be completing his first quarter as the sixth CEO of Starbucks (NASDAQ:SBUX). But unlike his immediate predecessor, there will be no honeymoon

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