Starbucks (SBUX) has a “meaningful” opportunity to re-accelerate its US business after recent headwinds, RBC Capital Markets said in a note to clients emailed Friday.
“Amidst macro [and] idiosyncratic headwinds, the US business has been challenged in FY24 which we believe is an opportunity as the new CEO Brian Niccols adjusts the strategy of the business,” the note said.
Starbucks can improve factors like “wait times” as well as the “value proposition on both pricing and customer experience,” RBC said.
“Ongoing throughput investments can be increasingly impactful; we like the implementation of a 4-minute wait time given the focus on customer experience,” the note said. “And incremental investments, while margin dilutive in the [near term,] could reaccelerate traffic which is critical for the stock to work.”
Meanwhile, in China, even amid a challenging macro scenario, the company may see a rebound due to factors like “increasing urbanization,” the “rise of the middle class” and “increasing coffee adoption,” RBC said.
RBC said it’s assuming coverage of Starbucks with an outperform rating and a $115 price target, and it recommends owning the stock.