A Starbucks upgrade tackles a thorny issue pushed by the stock's skeptics

An important development from the financial markets: Wall Street is warming back up to Starbucks . Starbucks popped nearly 2% on Thursday after TD Cowen upgraded the stock to buy from hold, arguing the coffee giant's closely watched turnaround is moving ahead of schedule. The firm also raised its price target to $120 from $106, citing stronger same-store sales, easing cost pressures, and a clearer path to earnings growth.

In a note to clients, the analysts wrote that they "gained a greater appreciation that Starbucks is in the early innings of the North America revitalization," after a visit with CEO Brian Niccol and CFO Cathy Smith. Translation: much more to come. Indeed, following that meeting, TD Cowen raised its same-store sales forecast for 2026 through 2028 in North America to 6.

Economic Details

1%, 5%, and 4%, up from 5. All estimates are above the Wall Street consensus figures. The analysts also increased their earnings per share estimate by about 9% to $3.

94 by fiscal 2028 (ending in September 2028), up from their previous forecast of $3. 52 and above the consensus $3. Cost cuts will support EPS growth, the firm said, as management aims for $800 million in cumulative savings by 2027.

Other levers include "a high frequency pace" of menu innovation, "optimal channel of marketing," and growing the membership and frequency of its loyalty program. Under Niccol, who became CEO in September of 2024, Starbucks has been implementing "a lot of common-sense things they probably should have done a long time ago to fix the business," said Jeff Marks, director of portfolio analysis, during the Morning Meeting for Investing Club members on Thursday. "Starbucks is not done," Jim Cramer said Thursday during the meeting, adding that the stock "could trade much higher.

Analyst Views

" We have a $115 price target on the stock and keep our rating at 2 , which means we'll wait for a pullback before buying more. To be sure, execution remains critical, and Starbucks still has work to do to prove that margin recovery can happen consistently. Margin improvement has become the biggest debate amongst Starbucks investors, as some viewed Niccol's "Back to Starbucks" turnaround as too expensive.

Others pointed out that those costs are a necessary evil for rebuilding the brand and improving customer retention. In the company's latest second-quarter earnings reported on Apr. 28, Starbucks delivered its first earnings beat in five quarters.

Those results pushed the stock up nearly 10% over the past month. Shares have rallied 29% year-to-date, trading at $108 per share, though still below March 2025 highs of $117 per share. We trimmed our Starbucks position on Apr.

Financial markets are tracking the development closely as investors assess the likely impact.