Starbucks Corp (NASDAQ:SBUX, XETRA:SRB) will report its fiscal first quarter earnings on Wednesday, with investors watching closely for signs the coffee giant’s “Back to Starbucks” turnaround is gaining tractions, according to UBS analysts.
The firm maintained a ‘Neutral’ rating and price target of $94 on Starbucks ahead of its report, in line with current levels.
Wall Street analysts on average expect Starbucks to report a 2.5% year-over-year increase in revenue to $9.63 billion, but a decline in earnings per share to $0.57 from $0.69 in the year-ago quarter.
The UBS analysts expect sales trends to improve in Q1, but also expect margins and profits to remain under pressure due to continued investments.
UBS expects US same-store sales growth to come in around 3% to 4%, above consensus expectations of 1.9%, and said the earnings call will likely center on US sales trends, the pace of strategic progress, and the company’s investment and cost-saving plans.
They also expect Starbucks’ Investor Day on January 29 to focus on fiscal year 2026 guidance and longer-term targets, and they noted the event could act as a catalyst if management delivers a confident outlook.
“We believe the event could be a positive catalyst for shares given recent sales momentum, likely optimistic management outlook commentary, and a solid near-term path,” the analysts wrote. “But we currently have a tougher time getting to notable upside to consensus earnings estimates over the coming years, which we think is needed to support more significant gains.”
UBS added that they believe investor sentiment toward Starbucks remains mixed, with bulls seeking upside from recent same-store sales momentum, confidence in outlook from a strong CEO and Investor Day support for a return to solid growth.
“Bears are more cautious on medium to long-term earnings power, struggling to get close to $4 in EPS, and are often below consensus of $3.50, and can't justify current valuation,” they wrote.