Anika Begay
Wall Street wasted no time in buoying Starbucks shares after the No. 1 U.S. coffee restaurant named Chipotle CEO Brian Niccol as CEO, dumping Laxman Narasimhan. Baird upgraded Starbucks from neutral to outperform shortly after the news broke and before trading had even officially begun on Wall Street. “We see a more favorable risk/reward tradeoff on SBUX following the hiring of Brian Niccol as president and CEO,” wrote analyst David Tarantino. “While we recognize the continued near-term risks related to the external operating environment, we believe Niccol brings a skill set that will prove invaluable in strengthening internal operating fundamentals for the company and setting the stage for healthier growth in the years ahead, and based on this outlook, we now expect sentiment on the stock to remain positive even if operating results are lackluster for the next few quarters of shareholder struggle.” Starbucks shares have struggled over the past three years after an initial boom in demand in the wake of the pandemic. Since Narasimhan was named CEO in March 2023, the stock’s struggles have worsened, falling 21% during his tenure as the restaurant has struggled with slower service lines and found the right pricing strategy in this inflationary environment. SBUX 5Y Mountain Starbucks, 5Y Baird set a new $110 price target on Starbucks, representing a 40% upside from Monday’s close. The stock had already risen 15% to around $89 in premarket trading. Niccol has been running Chipotle since 2018 and prior to that was the top leader at Taco Bell, which is owned by Yum Brands. “We view Niccol as an exceptional executive based on his track record of driving strong results at Chipotle since joining in 2018, as well as his successful stints at YUM (including as CEO of Taco Bell) and Procter & Gamble,” Baird’s note said.
