Starbucks (SBUX) shares remain in focus after the multinational chain of coffeehouses announced plans of laying off 300 of its corporate employees and closing several of its regional offices.
These job cuts are part of CEO Brian Niccol’s “Back to Starbucks” turnaround strategy, aimed at reducing corporate overhead and streamlining operations.
At the time of writing, Starbucks stock is up more than 25% versus the start of this year.
What These Layoffs Mean for Starbucks Stock
SBUX expects to incur $400 million in restructuring charges, including $120 million for severance packages and $280 million in real estate asset impairments.
While layoffs often signal underlying corporate pressure, experts view this restructuring as bullish for the Seattle-headquartered firm.
By trimming U.S. corporate roles and closing offices in major hubs like Atlanta, Burbank, Chicago, and Dallas, Starbucks is directly tackling operational friction.
The layoffs are designed to simplify corporate layers, lower costs, and eliminate $2 billion of costs over the next two years, potentially clearing the path for SBUX shares to rip higher.
Investors are highly optimistic because these corporate savings are being strategically reallocated directly into in-store operations, such as increasing barista staffing and enhancing cafe environments, which have already sparked a noticeable surge in customer traffic.
TD Cowen Sees Further Upside in SBUX Shares
In a recent note to clients, TD Cowen analysts also upgraded Starbucks shares to “Buy” and raised their price target to $120, indicating potential upside of another 13% from current levels.
According to them, the coffee giant is strongly positioned for aggressive margin recovery; brand revitalization efforts, including cost cuts and improving customer experience, will materially boost profitability.
The investment expects SBUX to scale its financial performance, comfortably reaching an annual earnings per share (EPS) of nearly $4 within the next three years.
Additionally, the Nasdaq-listed firm pays a healthy dividend of 2.32% as of writing, which makes it even more attractive to own for the long-term, it concluded.
What’s the Consensus Rating on Starbucks?
Other Wall Street analysts also seem to agree with TD Cowen on Starbucks.
The consensus rating on SBUX stock sits at “Moderate Buy,” with price objectives going as high as $137, indicating potential upside of more than 25% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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