Baird Upgrades Starbucks to Outperform, Sees Turnaround Strategy Taking Hold

Starbucks gained in morning trading after Baird upgraded the stock to Outperform, expressing confidence in the company's turnaround strategy. Baird believes the strategy will take hold in the next few quarters.

Starbucks (SBUX) stock gained in morning trading on Tuesday after Baird upgraded the stock to Outperform, expressing confidence in the company's turnaround strategy. Baird believes the strategy will take hold in the next few quarters [1].

The upgrade reflects Baird’s "high conviction" that turnaround strategies implemented under new leadership will effectively transform Starbucks into a "better company." Baird expects visibility of this transformation to become "increasingly clear over the next several quarters" as the coffee chain continues to implement its strategic initiatives [2].

The firm anticipates that "tangible evidence of progress toward better financial performance" will boost investor sentiment toward Starbucks. This improved sentiment should help "support elevated valuation metrics on the shares as earnings start to rebound," according to Baird’s analysis [1].

In the quarters ahead, analysts will be watching for the effectiveness of the Green Apron Service rollout in driving transaction growth and customer satisfaction, early signs of margin stabilization as cost-saving measures are implemented, and progress in international markets, especially the development of a strategic partnership in China. New menu launches and updates to the loyalty program will also be key indicators of Starbucks’ ability to regain momentum [3].

Starbucks currently trades at $91.63, down from $92.95 just before the earnings. Despite reporting fiscal third-quarter earnings per share of $0.50, which fell short of Guggenheim’s estimate of $0.58, the firm raised its price target for Starbucks to $90, maintaining a Neutral rating [3].

Analysts covering Starbucks are split, however. LSEG data shows that 18 of 39 of those covering the stock rate it a hold. Another 17 have a buy or strong buy. The remaining four hold underperform and sell ratings [1].

References:
[1] https://www.cnbc.com/2025/08/12/baird-upgrades-starbucks-says-the-turnaround-picture-is-becoming-clear.html
[2] https://www.investing.com/news/analyst-ratings/baird-upgrades-starbucks-stock-rating-to-outperform-on-turnaround-confidence-93CH-4184261
[3] https://finance.yahoo.com/news/5-most-interesting-analyst-questions-043658018.html