Starbucks' strategy shift will drive the stock even higher from where it trades now, according to TD Cowen. The research firm upgraded the coffee chain to buy from hold. It also hiked its price target on shares to $120 from $106, implying 13% upside from Wednesday's close. "Starbucks has numerous tangible drivers to deliver positive sales revisions in a strong category backdrop," analyst Andrew Charles said Thursday in a note to clients. "As the company prioritizes labor investments, we forecast margins will recover amid our combined expectations for sales leverage, easing COGS & incentivized non-core cost cuts." TD Cowen expects Starbucks to notch a 4% increase in its same-store sales in fiscal year 2028. Its forecast comes in above the Street's consensus estimate of 3.4%, according to the analyst note. Starbucks remains in the "early innings" of a push to revitalize its operations in North America, Charles said. The cafe operator saw its sales slump for nearly two years, beginning around 2023. However, it began reversing the decline late last year. Starbucks' turnaround follows the implementation of its "Back to Starbucks" plan — a strategy to overhaul the firm's marketing, menu innovation and customer loyalty programs to boost its bottom line and stock. The plan has so far shown signs of success, with shares rising 26% year to date. If that gain holds, it would mark Starbucks' first annual gain since 2021. TD Cowen's call goes against consensus on Wall Street. Of the 40 analysts covering Starbucks, just 18 have a buy or strong buy rating on the stock, while 20 have a hold on it, LSEG data shows.
