Starbucks is the leading specialty coffee supplier in the world currently operating in over 70 countries in over 26,000 retail locations. Starbucks is continuing its work to incentivize consumers as they adapt to the uncertainty in the economy which initially caused them to close roughly half of their U.S retail stores.
Analyst, Chris O’Cull from Stifel, believes that Starbucks is taking control of its own destiny with the aggressive moves that they have recently done in order to get business back to ‘normal’. This was one of the main catalysts used for O’Cull to make the call to upgrade Starbucks to a Buy from Hold with a price target increase to $90 from $78.
“Under the leadership of CEO Kevin Johnson, we have been impressed with the company's willingness and ability to adapt quickly to the changing environment. Since the pandemic, the company has accelerated the rollout of several strategic initiatives: 1) strengthening digital engagement by expanding order/payment options in the U.S. (Stars for Everyone) and in China (mobile order/pay on multiple Alibaba platforms and new partnership with WeChat vs. mobile ordering previously available only with the Starbucks app); 2) improving convenience with drive-thru enhancements and new store formats; and 3) increasing beverage innovation, with a focus on plant-based options” O’Cull told investors in a note released after yesterday’s closing bell.
“In our view, investors should look for companies willing and able to innovate quickly to address the challenges of the current environment. Despite its size, Starbucks has been able to accomplish this feat better than almost anyone in the restaurant industry” added O’Cull.
This is great news for investors who are looking to invest in a company that is determined to succeed no matter what obstacles they endure. Starbucks has been hit hard by the first waves of COVID, but the analyst expects that Starbucks will bounce back harder and expand their business operations.
Starbucks shares gained roughly 2.21% (at the time of this writing) in market trading after the upgrade.
Disclosure: At the time of publication, I have no positions in any of the securities mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.