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Starbucks Faces Margin Risks Despite Strong Start, RBC says

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Starbucks (SBUX) is likely to face continued margin pressure in the second half of the year, despite a strong Q1 performance, according to RBC Capital Markets.

RBC said that in its view "questions around the durability of comps and the path of margin improvement beyond FY26/ FY27 remain, which were key pillars to our March downgrade thesis, which remains unchanged."

The brokerage flagged North America margins as a key area of concern, noting cost pressures from inflation, food mix and higher waste tied to new menu items could continue and weigh on profitability.

RBC maintained its sector perform rating and raised price target to $110 from $105.

Price: $106.49, Change: $+9.21, Percent Change: +9.47%

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