Investing.com -- Jefferies upgraded Starbucks Corp. to Hold from Underperform on Monday, citing reduced international exposure following the completion of a China joint venture deal and early signs of stabilization in the company’s core U.S. business.

The brokerage raised its price target to $92 from $86. The move reflects a clearer path for the coffee chain’s ongoing turnaround under Chief Executive Brian Niccol, who took the helm roughly 18 months ago.

The early April closing of a joint venture (JV) agreement for the China business reduces Starbucks’ international footprint meaningfully, the analysts said. Prior to the deal, the international segment accounted for approximately 33% of global system sales, 27% of revenues, and 25% of operating profit.

Starbucks now has the least international exposure among its large global quick-service peers, which include McDonald’s, Yum Brands, Restaurant Brands International, and Domino’s Pizza.

"With relatively less Int’l exposure now that China is franchised (deal completed April 2) and, more importantly, a stabilizing U.S. business, we think visibility into SBUX executing its turnaround is improved," analysts led by Andy Barish said.

Still, the team remains somewhat cautious on the stock. Jefferies’ estimates remain below Wall Street consensus through fiscal 2027, with analysts modeling earnings per share of $2.27 and $2.73 for fiscal years 2026 and 2027, respectively, compared to consensus of $2.30 and $2.95.

The gap in fiscal 2027 (FY27) stems from more conservative same-store sales assumptions and an operating margin forecast roughly 100 basis points below the Street, as Jefferies expects continued investment in labor and limited visibility into cost savings.

"We maintain a slightly more conservative outlook than the Street through FY27, which we think will require strong execution across most sales-& cost-initiatives, but think the co. can execute against its targets," the analysts said.

On valuation, they acknowledged that Starbucks remains richly priced relative to peers — trading at around 35 times forward earnings versus 21 times for comparable global franchised restaurant companies and 22 times for the S&P 500.

"SBUX continues to trade at a large premium to its global, asset-lite peers...which we find unwarranted," they said, though they noted that expectations have finally been reset to more "realistic levels."

For the stock to move higher, the analysts said same-store sales growth in the mid-single digits in the second half of fiscal 2026 would likely be needed, a bar it views as achievable but not assured given the uncertain macroeconomic backdrop.