Should You Buy the Post-Earnings Dip in Starbucks Stock?
Starbucks (SBUX) shares closed slightly down on Wednesday after coffeehouse company said its comparable sales remained weak in its fiscal Q3.
Investors are cautious on SBUX Wednesday also because the company’s $0.50 a share of earnings in the third quarter missed Street estimates by some 23%.
Starbucks stock has recovered significantly under the leadership of its new chief executive, Brian Niccol, over the past four months but is still down more than 20% versus its year-to-date high set in late February.
How to Play Starbucks Stock After Q3 Earnings?
Investors should consider buying the post-earnings dip in SBUX shares as a 4% year-over-year increase in its revenue to $9.5 billion was handily above Street’s expectations for its fiscal Q3.
More importantly, “while the financial results don’t yet reflect all the progress we’ve made,” the company’s turnaround is actually advancing ahead of schedule, Niccol reassured investors in the earnings release.
In the third quarter, Starbucks saw an uptick in its China business for the first time since early 2024, which also bodes meaningfully well for its stock price.
Starbucks stock may be attractive to own at current levels also because the Seattle-headquartered firm launched the “Green Apron Service” this week as part of its broader commitment to bringing back customers.
Wells Fargo Remains Bullish on SBUX Shares
Wells Fargo analysts maintained their “Overweight” rating on Starbucks shares after the company’s Q3 earnings release, saying the new management’s initiatives are “showing promise.”
The investment firm expects SBUX stock to extend gains as the coffee giant executes on its plans of launching a new app, refreshing its “Rewards” program, and rolling out new drinks in its fiscal 2026.
Wells Fargo currently has a $105 price target on Starbucks, indicating potential upside of nearly 14% from here.
Wall Street Recommends Caution on Starbucks
Investors should note, however, that not all Wall Street analysts are as constructive on Starbucks stock as their peers at Wells Fargo.
While the consensus rating on SBUX shares remains at “Moderate Buy,” the mean target of about $93 is roughly in line with the current trading price.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.