Starbucks Stock Rises 2% as Investors Bet on Back to Starbucks Turnaround Ahead of Thursday Earnings Report

Starbucks shares rose more than 2% on Monday as investors positioned ahead of the coffee chain's quarterly results this week. Wall Street expects further evidence that Chief Executive Brian Niccol's turnaround plan is bringing customers back.

Starbucks shares gained $2.28, or 2.26%, to $103.08 in early trading on the Nasdaq at 10:14 a.m. EDT, outpacing modest gains in the broader market.

The stock has traded between $77.99 and $110.51 over the past 52 weeks.

Earnings Thursday

Starbucks will report fiscal fourth-quarter results after the market closes on Thursday, Oct. 29, followed by a conference call with analysts.

Analysts on average expect adjusted earnings of about 72 cents a share on revenue of about $9.23 billion, according to MarketBeat data. Consensus forecasts put North American comparable-store sales growth at about 6.7%.

Some analysts expect better. UBS forecasts U.S. same-store sales growth of about 7.5% and earnings of 77 to 82 cents a share. UBS said it expects "continued sales momentum supported by progress on the 'Back to Starbucks' turnaround plan."

Still, UBS kept a neutral rating and cut its price target to $105 from $112. It said the shares "already reflect a solid multiyear sales and earnings recovery" and described a "balanced risk-reward profile at current levels."

Turnaround gains traction

Starbucks has been rebuilding its business under Niccol, who joined from Chipotle Mexican Grill in 2024. His "Back to Starbucks" strategy focuses on faster service, a simpler menu, better store experiences and a return to the chain's coffeehouse roots.

The plan has started to show results. In late July, Starbucks reported third-quarter results that beat expectations:

Global comparable-store sales rose 7.9%, compared with expectations of 5.7%. North American comparable sales rose 8.1%. Adjusted earnings were 85 cents a share, compared with expectations of 56 cents. Revenue was $9.3 billion, down slightly from a year earlier. Starbucks said this was mainly because its China business moved into a joint venture.

"It's clear proof that our Back to Starbucks plan is working," Niccol said at the time.

Starbucks raised its full-year outlook. It now expects U.S. comparable sales to rise slightly more than 6%, and projects adjusted earnings of $2.55 to $2.65 a share, up from $2.25 to $2.45. It said it expects fourth-quarter U.S. same-store sales to rise 6.5% or more.

Chief Financial Officer Catherine Smith said in July, "We are encouraged by our strong start to the quarter." She cautioned that traffic comparisons would get tougher.

What investors will watch

Beyond the headline numbers, analysts will look for:

Customer traffic trends, as opposed to growth driven by higher prices or larger orders Profit margins, as Starbucks invests in staffing and store upgrades An early outlook for fiscal 2027, with UBS expecting U.S. same-store sales guidance of 3% or more Updates on the China joint venture and international markets

The stock trades at a high valuation, so expectations are high. Some analysts warn that any sign of slowing momentum could weigh on the shares.

Wall Street views

Analysts are mostly positive on the stock. According to MarketBeat, 24 analysts rate Starbucks a buy, 12 a hold and four a sell, with an average price target of about $110. BMO Capital Markets has a $130 target, Deutsche Bank $126 and Wells Fargo $120.

The company pays a quarterly dividend of 63 cents a share.

Consumer spending has held up despite higher fuel prices, which have pushed diesel above $6 a gallon and raised costs across the economy. Starbucks' report will offer a fresh read on how middle-income consumers are spending on discretionary items such as specialty coffee.

The Fed's policy decision on Wednesday and earnings from major technology companies are also expected to drive market sentiment this week.

_This article is for information only and does not constitute financial advice._