Jefferies has reaffirmed an Underperform rating on Starbucks (NASDAQ:SBUX) and kept its $75.00 price target in place as the coffee chain prepares to report fiscal first-quarter results and host an Analyst Day on January 28-29. The firm said it views the recent share rise as an "unsupported rally" and warned that the upcoming events could disappoint investors, leaving the stock exposed to downside through 2026.
While Jefferies acknowledged operational progress under CEO Niccol, the research team said it remains unconvinced that Starbucks has a clear path to deliver sustainable mid-single-digit same-store-sales growth or to reach the mid-to-high teens operating margins that the current valuation implies. The firm emphasized that those outcomes are needed to justify the stock's present pricing.
Jefferies listed a number of potential near-term downside drivers. The firm expects margin headwinds in the fiscal first and second quarters tied to ongoing labor reinvestment, the rollout of the Assistant Store Manager program (also referred to as Coffeehouse Coaches), and elevated coffee costs. In Jefferies’ view, low-single-digit same-store-sales increases will not be sufficient to generate meaningful operating-margin leverage in the second half of the fiscal year.
The note pointed to data from Second Measure that showed a sequential decline in fiscal first-quarter sales despite an approximate 2% same-store-sales benefit from recent closures of 5-6% of U.S. company-owned locations. Jefferies said it does not expect the early January strength to be durable, noting there was no evidence of lasting improvement following the last two seasonal menu launches.
Jefferies added that any apparent gains in reported same-store sales may be driven by easier year-ago comparisons, the recent store closures, extended operating hours and the boost from the first year of increased TV advertising, which has now lapped. The firm characterized the core business as still challenged, saying that traffic growth is "likely elusive" amid heightened competition.
Other developments in the Starbucks story present a mixed picture. The company announced a quarterly dividend of $0.62 per share, payable on February 27, 2026, to shareholders of record as of February 13, 2026. Meanwhile, William Blair upgraded Starbucks’ rating from Market Perform to Outperform, citing an expected domestic sales recovery in the December quarter that could help drive positive full-year sales growth for fiscal 2026. BofA Securities also raised its price target on the stock, moving it from $106 to $114 while keeping a Buy rating and pointing to growth potential in China despite recent headwinds.
Separately, labor and policy risks are in play. Unionized Starbucks baristas have planned a strike in more than 25 cities on November 13 to coincide with the company’s Red Cup Day as they seek a contract after prolonged negotiations. In addition, President Donald Trump is set to sign an executive order to reduce tariffs on commodities such as coffee, a development that could affect Starbucks’ input costs and broader supply-chain dynamics.
Taken together, the analyst caution from Jefferies and the assorted corporate and market developments underscore a dynamic period for Starbucks. Jefferies’ stance centers on the view that absent stronger traffic and sales momentum, and given near-term margin pressures, the shares face downside risk despite pockets of optimism from other analysts.