Starbucks (SBUX) PT Raised to $120 at Evercore ISI

Evercore ISI analyst David Palmer raised the price target on Starbucks (NASDAQ: SBUX) to $120.00 while maintaining a Outperform rating.

The analyst comments "Anticipating mid-single digit North America (NA) SSS growth in FY27 with improving incremental margins. We are raising our F4Q NA SSS growth estimate from 6% to 7% (cons. 5%) and our FY27 NA SSS growth estimate to 4.5% (cons. 3.9%). While our base case assumes that 2–2.5pp of FY26 helpers will roll off in early FY27 (see detail on page 2), we believe that Starbucks has building benefits from store uplifts, mobile order-ahead sequencing, Mastrena 3 espresso machine, and innovation (e.g., sparkling beverages, and PM food). With the top-line recovery ongoing, we anticipate improving incremental margins in FY27 (50%+ in North America vs. 9% estimated in FY26) and FY28 as labor reinvestment is lapped and productivity savings ramp ($2B by FY28). Reiterate Outperform rating and raising price target to $120 with higher estimates. Following F3Q results and our discussion with management, we are raising our F4Q26 EPS estimate from $0.74 to $0.76 (+46% YoY; cons. $0.69) and our FY27 EPS estimate from $3.29 to $3.40 (+27% YoY; cons. $3.04). With higher earnings, we are raising our price target from $115 to $120, which translates to 29x our FY28e EPS of $4.15 (+22% YoY; cons. $3.72). Although this is one of the highest multiples in restaurants, it is still less than a 2x P/E to total return as we assume that FY29/FY30 could still deliver mid-teens EPS growth with an ongoing margin recovery."

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