TLDR
- JPMorgan lowered Starbucks price target from $105 to $100, maintaining Overweight rating
- Starbucks missed Q2 2025 earnings with EPS of $0.41 vs $0.49-0.51 expected
- Revenue reached $8.76-8.8 billion, slightly below forecasts of $8.89 billion
- CEO Brian Niccol has cut 1,100 corporate roles and restructured reporting systems
- Stock has declined 12.14% over six months while maintaining 2.88% dividend yield
Starbucks Corporation has seen its price target cut by JPMorgan amid disappointing second-quarter results for 2025. The investment bank lowered its target to $100 from $105 while keeping an Overweight rating on the coffee giant’s stock.
The Seattle-based coffee chain reported earnings per share of $0.41 for Q2, falling short of analyst expectations. This represents a 16.33% earnings surprise on the negative side compared to the Zacks Consensus Estimate of $0.49 per share.
Revenue came in at approximately $8.76 billion, missing forecasts by a small margin. This performance stands in contrast to the previous quarter when Starbucks delivered a positive earnings surprise of 4.55%.
The $96.38 billion company has faced multiple challenges recently. Staff shortages during peak hours have slowed service across all channels.
Menu complexity has hampered morning operations. The chain has also struggled to meet consumer demands for afternoon beverage options.
Restructuring Under New Leadership
CEO Brian Niccol, who took over in September 2024, has implemented several strategic changes to address these issues. He has reorganized his direct reports and eliminated 1,100 corporate roles.
The restructuring aims to simplify the company’s reporting structures. Many unfilled positions have also been cut as part of this effort.
During a recent call, the company emphasized its commitment to improvement. “We’re not just building back our business. We’re building back a better business,” was the message to investors.
Starbucks has been criticized for rushing products to market without proper testing. The company has also invested in equipment upgrades that some analysts consider unnecessary.
Another point of contention has been the brand’s drift from its signature “third place” coffeehouse atmosphere. This distinctive environment had long set Starbucks apart from both new and established quick-service restaurant competitors.
Past marketing strategies have come under fire as well. Critics note that focusing on discounts moved the message away from Starbucks’ core products and services.
Financial Outlook
Despite these challenges, Starbucks maintains some financial strengths. The company offers a solid dividend yield of 2.88%.
It has raised its dividend for 15 consecutive years, according to InvestingPro analysis. This consistent return to shareholders comes even as the stock has declined 12.14% over the past six months.
Analyst price targets for Starbucks currently range from $76 to $125. Seventeen analysts have revised their earnings expectations downward for upcoming periods.
KeyBanc Capital Markets has adjusted its projections following the latest results. They’ve revised their EPS forecast for fiscal years 2025 and 2026 to $2.56 and $3.10, respectively.
Evercore ISI also lowered its price target from $105.00 to $95.00. However, they maintained an Outperform rating, showing faith in the company’s long-term potential.
Their analysis suggests Starbucks could see EPS growth rates exceeding 15% beyond fiscal year 2026. This points to a potentially strong recovery after the current challenges are addressed.
The company has been focusing on improving service times through labor-centered approaches. Management believes these efforts will help drive transaction growth in coming quarters.
Starbucks shares have lost about 8.1% since the beginning of 2025. This underperformance comes against the S&P 500’s decline of 6% during the same period.
The coffee chain has topped consensus revenue estimates twice in the last four quarters. However, it has exceeded EPS expectations only once during this time.
For the coming quarter, the current consensus EPS estimate stands at $0.87 on projected revenues of $9.51 billion. The full fiscal year forecast calls for earnings of $2.92 per share on $37.25 billion in revenues.
Starbucks currently trades at a P/E ratio of 27.37, reflecting ongoing investor confidence in its recovery potential despite recent stumbles.
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