Starbucks stock rises after upgrade on growing sales potential

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Starbucks Corp. rose 1.7% in Tuesday premarket trading after the coffee chain was upgraded to buy from hold at Stifel based on sales potential. Stifel raised its price target to $90 from $78. Stifel analysts are bullish about same-restaurant sales growth in the near-term despite headwinds including travel and breakfast declines. Stifel is also upbeat about Starbucks’ initiatives like curbside pickup, which should give fiscal 2021 a bump. And analysts based the upgrade on the decision to pull forward changes in the loyalty program, the launch of new store formats and other initiatives. “Our upgrade reflects our view the company is taking quick, aggressive steps to navigate these headwinds,” wrote analysts led by Chris O’Cull. “We believe these actions will lead to steady sales recovery in the U.S. and China.” Analysts applaud the company’s quick response to the coronavirus under Chief Executive Kevin Johnson. “Despite its size, Starbucks has been able to accomplish this feat better than almost anyone in the restaurant industry.” On Tuesday, Starbucks announced the return of the Pumpkin Spice Latte for the 17th year, and a shift to the loyalty program starting September 15 that will allow customers to earn points through additional payment methods. Starbucks stock has slumped 10.5% for the year to date while the S&P 500 index has gained 6.2% for the period.
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