Starbucks draws analyst upgrades on 'home run hire' of new chief executive

By Steve Gelsi

Stifel, Deutsche Bank, CFRA and TD Cowen analysts hike ratings on the coffee giant after it names Chipotle Mexican Grill's Brian Niccol as its new chief executive

Wall Street's praise of Starbucks Corp.'s hiring of Brian Niccol as its new chief executive extended to a second day on Wednesday, with the coffee giant drawing multiple analyst upgrades.

Starbucks' stock (SBUX) cooled off, however, after posting its largest ever one-day gain of 24.5% in the previous session. Starbucks shares fell 2.1% in early trading on Wednesday.

Deutsche Bank analyst Lauren Silberman upgraded Starbucks to buy from hold, noting the company's "home run hire" the day after Niccol was named to the job. Niccol has led Chipotle Mexican Grill Inc. (CMG) to outperformance in the sector.

"We believe Mr. Niccol's strengths in operations, marketing and innovation, all enhanced with technology, and experiences at both Chipotle and Taco Bell (YUM), which are culture-forward, young brands with strong value propositions, are particularly valuable," Silberman said.

Chris O'Cull, an analyst at Stifel, boosted his Starbucks rating to buy from hold and lifted the stock's price target to $110 a share from $80 a share, saying "prioritization and execution should be much better" under Niccol.

"We expect the shares to remain supported by positive sentiment over the next few quarters, even if near-term results fall short of the Street mean," O'Cull said.

CFRA analyst Siye Desta upgraded Starbucks to buy from hold and boosted his price target on the company's stock to $108 a share from $80 a share. He praised Niccol's record in attracting Generation Z workers to Chipotle Mexica Grill by boosting the company's employee benefits, such as college tuition assistance.

"This is the type of change [Starbucks] needs and with Niccol's hiring, we think [Starbucks] now has the proper gravitas to bet on it happening," Desta said.

On Tuesday, TD Cowen analyst Andrew Charles upgraded Starbucks to buy from hold and boosted his price target for the stock to $105 from $81.

"We expect Mr. Niccol to help Starbucks better identify its brand identity and better utilize marketing to create brand buzz," Charles said. "Importantly, as evidenced when Mr. Niccol went to Chipotle from Taco Bell, he appreciates what makes a premium brand special, while raising awareness of these features to the masses."

Also read: Chipotle's stock sold off on CEO exit, but this analyst says it's time to buy

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-14-24 0951ET

Copyright (c) 2024 Dow Jones & Company, Inc.