Shares of Starbucks Corporation SBUX have declined 18.8% over the past month compared with the Zacks Retail – Restaurants industry’s fall of 8.1%. The stock has underperformed the Zacks Retail-Wholesale sector’s and the S&P 500’s decline of 8.3% and 9.7%, respectively.
Investor sentiment surrounding Starbucks has been weighed down by ongoing macroeconomic uncertainty and concerns over tariff impacts, recession risks and potential international backlash against U.S. brands.
SBUX's One-Month Price Performance
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From a technical perspective, Starbucks stock is currently trading below its 50-day moving average, signaling a bearish trend.
SBUX Stock Trades Below 50-Day Moving Average
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While the near-term headwinds are undeniable, long-term investors may find an opportunity brewing beneath the surface. Given the significant pullback in Starbucks’ shares currently, investors might be tempted to snap up the stock. But is this the right time to buy SBUX? Let’s find out.
What’s Pressuring Starbucks Stock?
Tariffs Turmoil Hits SBUX: Starbucks, sharing space with Dutch Bros Inc. BROS, McDonald's Corporation MCD and First Watch Restaurant Group, Inc. FWRG in the same industry, is feeling the ripple effects of broader economic pressures, particularly those stemming from rising tariffs.
The Trump Administration’s surprise announcement of a 46% tariff on imports from Vietnam sent shockwaves across sectors, and Starbucks is no exception. Vietnam is one of the top coffee-producing countries and a critical part of Starbucks’ global supply chain, along with over 30 other sourcing nations. Although Starbucks has not yet disclosed its specific exposure to the new tariffs, analysts speculate the impact could be material, especially given reports that the company has scaled back its hedging strategy against coffee price volatility.
Recession Fears Brewing: The U.S. economy is now facing heightened recession risks, and Starbucks could be particularly vulnerable to tightening consumer wallets. The company has been hit by high coffee prices owing to unfavorable weather conditions in certain regions, including Brazil.
Futures for arabica coffee in New York are already trading near record highs, driven by adverse weather and challenging growing conditions in key producing regions. Similarly, robusta futures in London have seen a significant surge over the past year. In an environment where discretionary spending is being closely monitored by consumers, minor price increases may lead to reduced foot traffic or lower ticket sizes.
Compounding the pressure is the potential for global backlash against U.S. brands, which could erode international sales, a vital segment for Starbucks’ growth strategy. As global political and economic tensions rise, the brand’s image abroad could be tested in the quarters ahead.
Downward Earnings Estimate Revision Ail SBUX Stock Prospects
Starbucks’ fiscal 2025 earnings per share (EPS) estimates have been revised downward, dropping from $3.00 to $2.97 over the past 60 days. This downward trend reflects weakening analyst confidence in the stock’s near-term prospects.
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The company is likely to report lackluster earnings, with projections indicating a 10.3% slump in fiscal 2025. Conversely, industry players like Dutch Bros, McDonald's and First Watch are likely to witness growth of 26.5%, 4.5% and 23.3% year over year, respectively, in 2025 earnings.
Can SBUX Overcome the Headwinds?
Starbucks may be facing near-term challenges, but investors have plenty of reasons to stay confident in the stock’s long-term potential. The company is taking decisive steps to reignite growth by getting back to what made it a global icon: a welcoming coffeehouse atmosphere, premium handcrafted beverages, and skilled baristas who deliver a unique customer experience. Through its “Back to Starbucks” initiative, the company aims to rebuild its brand foundation and address the operational issues that have weighed on performance in recent quarters.
As part of its effort to reintroduce the brand to the world, Starbucks has significantly ramped up its marketing communications, including robust linear TV media campaigns. The company has seen positive customer responses and improvements in store performance trends as a result. In addition, to enhance value perception, Starbucks removed the extra charge for non-dairy milk customizations, a move that not only increased customer interactions but also reversed a previous decline in non-dairy customizations, signaling that its strategic shifts are resonating well with consumers.
Operational improvements are also at the forefront of the turnaround. Starbucks is focused on optimizing both in-store processes and its overall supply chain, yielding notable efficiency gains. Enhanced partner stability and targeted investments in labor, technology, and store operations are expected to deliver long-term benefits.
These efforts — combined with a disciplined approach to testing and refining new initiatives — are intended to support margin expansion over time. By reinforcing its brand identity, boosting customer engagement through innovative marketing, and driving operational efficiencies, Starbucks is laying a solid foundation for long-term growth.
Valuation Insights for SBUX Stock
Starbucks stock is currently trading at a discount. SBUX is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.41X, well below the industry average of 3.85X, reflecting an attractive investment opportunity. Then again, other industry players, such as Dutch Bros, McDonald's and First Watch, have P/S ratios of 4.71X, 8.01X and 0.79X, respectively.
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Analysts’ Expectations on Starbucks’ Stock
Analysts maintain a cautiously optimistic outlook on Starbucks’ stock. Based on short-term price targets from 27 analysts, the average price target is $107.80, suggesting a potential upside of 31.3% from the last closing price of $82.10. Price forecasts range from a low of $76.00, indicating a 7.43% downside risk, to a high of $125.00, which represents a possible 52.3% upside. Meanwhile, Starbucks carries a solid average brokerage recommendation (ABR) of 2.10 on a scale of 1 (Strong Buy) to 5 (Strong Sell), reflecting a favorable consensus. Among 34 brokerage firms, 17 analysts rate the stock as a Strong Buy and two as a Buy, underscoring confidence in Starbucks’ growth potential.
SBUX Stock Investment Strategy
Starbucks remains a dominant force in the global coffee market, supported by its "Back to Starbucks" strategy, renewed marketing efforts, and focus on enhancing customer experience through operational improvements. While recent stock weakness has been driven by macroeconomic uncertainty, tariff concerns, and potential international backlash against U.S. brands, the company’s commitment to brand reinvigoration, customer value initiatives, and efficiency gains provides a strong foundation for future growth.
Starbucks’ ability to reconnect with customers, improve in-store operations, and drive long-term brand loyalty should support a sustainable recovery over time. However, near-term headwinds, including recession risks, global volatility, and margin pressures from targeted investments, could limit immediate upside potential.
Given these factors, existing investors may find it prudent to hold on to this Zacks Rank #3 (Hold) stock as Starbucks executes its turnaround strategy and navigates macroeconomic challenges. However, new investors may want to wait for clearer signs of stabilization, as ongoing external pressures could keep the stock volatile in the near term.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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