BofA raises Starbucks stock price target on strong sales momentum By Investing.com

BofA raised its Starbucks price target to $137 from $130 and kept a Buy rating, implying nearly 30% upside from the current $105.96 share price. The firm lifted its FY2026 EPS estimate to $2.49 from $2.41 and boosted North America same-store sales growth expectations to 7.0% from 4.0%, while also raising its international same-store sales forecast to 4.0% from 3.3%. The outlook is constructive, although third-quarter EPS was trimmed slightly to $0.62 from $0.65 due to cost pressures.

Analysis

The market is treating this as a simple multiple expansion story, but the more durable signal is that Starbucks appears to be regaining pricing power without relying purely on price. If traffic is improving while mix and ticket both hold, that usually supports a multi-quarter earnings revision cycle because it reduces the need for promo spend and lowers the risk that margin recovery gets clawed back by discounting. The bigger second-order effect is on coffee procurement and labor leverage: if same-store sales keep comping above low single digits, competitors with weaker brand equity will have to lean harder into offers, which can compress category margins broadly.

Near term, the stock is vulnerable to the usual post-upgrade setup: expectations move up faster than fundamentals, and the multiple already starts to discount a cleaner 12-month path. The key risk is that the current trajectory depends on execution in a relatively narrow window—if cost inflation reaccelerates or traffic normalizes after the next few quarters, the earnings revisions can flatten quickly. For the next 1-3 months, the most important catalyst is whether management can sustain U.S. transaction growth through a tougher comp set; that will determine whether this becomes a durable rerating or a relief rally.

The contrarian view is that the consensus is underpricing how much of the improvement may be cyclical rather than structural. Starbucks is benefiting from operational fixes and brand momentum now, but if the market is already paying for a cleaner margin bridge into FY26, upside from here likely needs either faster international acceleration or evidence that the U.S. can hold its growth without incremental promotions. In other words, the stock may be good, but the path to being meaningfully better than the current estimate base is narrower than the upgrades imply.

Key Decisions for Investors

• Go long SBUX on pullbacks toward the low-$100s with a 3-6 month horizon; upside is driven by continued estimate revisions, but the risk/reward is only attractive if the stock resets before the next earnings print.
• For tactical traders, sell an SBUX upside call spread into strength over the next 4-8 weeks; the setup favors good fundamentals but a capped near-term rerating if sentiment is already crowded.
• Pair trade: long SBUX / short a weaker discretionary traffic proxy over 2-3 months; this expresses relative brand and execution outperformance while reducing market beta.
• If you want convexity, buy SBUX calls around the next earnings date only on a pullback; the trade works if transactions and margin both surprise, but implied volatility likely makes outright premium unattractive after the upgrade cycle.