Starbucks: the stock outperforms, BofA in support

(CercleFinance.com) - Starbucks shares outperformed the U.
S. stock market on Wednesday morning, benefiting from a target increase from Bank of America.

Just under an hour after opening, the coffee chain's shares gained 0.4%, while the Nasdaq Composite was virtually stable.

BofA, which is maintaining its buy recommendation on the stock, this morning raised its price target from $112 to $118, saying it was more confident in the Seattle-based group's operational execution.

In a research note, the broker focuses in particular on the situation in the Chinese market, which it now considers more volatile and less profitable.

While Starbucks still has an advantage in this market, growth in the sector has moderated", the broker points out.

In its view, less intensive investment in China could therefore bolster the company's profitability and boost its valuation multiples.

"Licensing in China would allow Starbucks to focus on its US business (which generated 73% of Ebitda in 2023)", argues BofA.

"Knowing that new CEO Brian Niccol has moved to Yum! Brands, which relies heavily on its franchise network, and Chipotle, which is more selective when it comes to licensing (Middle East), the executive could be receptive to the idea of licensing', the intermediary believes.

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