Coffee shop operator Starbucks (SBUX) has come a long way from its origins in the 1990s. It was the headquarters of counterculture, then culture, and then it became a commodity. Today, it’s often seen as a pretentious, overpriced, and largely pointless affectation. However, there may be simple, but not easy, fixes that could help improve this perception. Indeed, analyst Danilo Gargiulo of Bernstein calls for Starbucks to focus on “the value proposition,” noting that it’s something that consumers “…might be looking for.”
Gargiulo currently has a Hold rating on Starbucks, with a $92 per share price target.
Further, the analyst pointed out that Starbucks today is a “much more complex store compared to the Starbucks that we used to see in pre-COVID levels.” And with “some realignment of pricing versus the expectations and willingness of consumers potentially to pay,” that could turn the place around. Of course, the idea of “cheaper Starbucks” might be tempting, but it may not sit well with management, who might not want to tarnish the perceived value of the brand.
Starbucks Impacted by CrowdStrike Outage
The CrowdStrike (CRWD) outage that took out a whole lot of hardware across multiple industries earlier today didn’t leave Starbucks unscathed. Starbucks’ Order Ahead feature went out, leaving some operations to offer up a free cup of hot or iced coffee as an apology to customers.
Reports note that, at one point, anyone accessing the Starbucks app saw that every item on the menu was sold out. That wasn’t true, of course—no Starbucks has ever seen that kind of run that I know of—but rather, it was a consequence of the CrowdStrike outage, one that many may never have foreseen.
Is Starbucks Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on nine Buys and 18 Holds assigned in the past three months, as indicated by the graphic below. After a 24.18% loss in its share price over the past year, the average SBUX price target of $88.29 per share implies 18.38% upside potential.
