Starbucks Stock Is Slipping. Why This Analyst Says to Sell.

Starbucks has struggled in recent years. Above, an outlet in Chicago. (Scott Olson/Getty Images)

Starbucks stock slid after Melius Research advised investors to sell, citing concerns about operational efficiency and the coffee chain’s efforts to revive its brand.

Analysts led by Jacob Aiken-Phillips began coverage of the stock with a Sell rating, setting a target of $80 for the price. The shares fell 1.6% to $93.42, which was the stock’s lowest closing price since Jun. 30. It also marks the worst three-day stretch since Jun. 25, when shares dropped 2.2%. The S&P 500 closed up 0.1%.

“Starbucks remains a global coffee leader, but the road to operational consistency and brand revitalization is longer and harder than consensus expects,” the analysts wrote.

“We are also Sell on Starbucks, where pricing has outpaced the consumer experience,” the analysts said. In addition, they said, a turnaround on operational efficiency will require time, and competition in China has skyrocketed.

Starbucks didn’t immediately respond to a request for comment.

The coffee giant has struggled as it adjusts to more competition and customer’s changing tastes.

Starbucks has faced increased competition in China, its largest international market outside of the U.S. with more than 7,700 stores. Same-store sales there fell 8% from a year earlier in fiscal 2024 and were down 6% year over year in this year’s first quarter.

Chinese coffee chain Luckin Coffee is one of Starbucks’ many competitors. The company, which sells fruit-flavored coffee and refreshers at lower prices than Starbucks, operates more than 24,000 stores globally, with more than 22,000 stores in China.

As of the close on Friday, Luckin Coffee shares had jumped 50% since the beginning of this year, while Starbucks was only up 3.3%. Luckin opened its first two U.S. stores in Manhattan two weeks ago, challenging Starbucks on its own turf.

“We see the stock reflecting much of the long-term potential but not the time and trade-offs required to rebuild momentum,” the analysts wrote. “A turnaround is underway but not yet proven, and execution risk is high.”

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