UBS: Optimistic about Starbucks CEO's return and company's revitalization plan, raises target price to $94

According to the Zhitong Finance APP, late last week, UBS expressed confidence in Starbucks (SBUX.US) CEO Brian Niccol's "Return to Starbucks" plan and raised the target price for Starbucks. Niccol previously led Chipotle Mexican Grill (CMG.US) out of a customer loss crisis caused by an E. coli outbreak. In a research report, UBS wrote: "Given CEO Niccol's past performance and the strategic initiatives he has implemented in operations, marketing, product, and customer experience, we believe that Starbucks' turnaround plan can gradually drive sales recovery." Analysts maintained a "neutral" rating but raised the target stock price to $95, slightly above the average target price of $92.64 reported by Visible Alpha. Starbucks closed at $93.48 on Monday, roughly unchanged from last week, with its stock price up 2.4% this year. UBS found that from 2024 to 2025, there is a "moderate increase" in the number of surveyed consumers planning to visit Starbucks in the coming year. UBS added that when Niccol implements changes that consumers say would make them visit Starbucks more frequently (including menu adjustments and improved service), foot traffic could further increase. However, UBS acknowledged that the recovery of the business will take time, as American consumers are under pressure, and there is a general perception that Starbucks' product prices are too high. According to UBS's survey, among those planning to reduce their spending at Starbucks, over 70% believe the chain's prices are too high. Deutsche Bank also found that in recent customer feedback, price was the biggest barrier. UBS stated that while Starbucks' brand value recognition has improved, it still lags behind competitors, especially in terms of recognition among high-income groups. The survey showed that about 24% of consumers with an annual income below $40,000 believe Starbucks' products offer good value for money, while only 3% of consumers with an annual income of at least $100,000 share this view. UBS said: "Although we expect menu prices will not see significant reductions and promotional activities will not increase substantially, we believe that an overall enhanced customer experience can improve the perceived value and cost-effectiveness of the products." Niccol's team recently held a three-day leadership workshop for Starbucks employees and announced plans to assign dedicated assistant store managers to most domestic stores