Starbucks' (SBUX) progress on its turnaround strategy could drive US comparable sales above consensus estimates for the fiscal third quarter, UBS Securities said in a note Friday.
The brokerage expects US same-store sales growth of about 7% at the coffee giant, compared with Wall Street's 6.2% view, driven by gains in transactions and ticket size. Starbucks is scheduled to report its results Wednesday.
UBS attributed the sales momentum to marketing and menu innovation, as well as to operational improvements, including store closures.
"We expect (Starbucks) turnaround plans and new sales initiatives should continue to support a sales recovery," UBS Analyst Dennis Geiger said.
The company launched its "Back to Starbucks" strategy in September 2024 to revive traffic growth and support long-term margin expansion. Starbucks has announced multiple rounds of layoffs since 2025.
Investors expect an upside to Starbucks' third-quarter earnings consensus of $0.66 per share, along with an increase to its full-year adjusted EPS guidance, according to the UBS note.
Earlier in the year, the company raised its adjusted EPS outlook to between $2.25 and $2.45 as its second-quarter results exceeded market expectations.
The brokerage projects full-year EPS of $2.41 against the consensus view of $2.40.
UBS has a neutral rating on Starbucks' stock with a $105 price target. The stock has rallied nearly 23% so far this year.
"We believe shares already reflect a solid multiyear sales and earnings recovery, with a balanced risk/reward profile at current levels based on a reasonable valuation and the upper end of (or above) the (fiscal year 2028) target earnings range," Geiger added.
US restaurant and food distributors likely saw a mixed second quarter as stable same-store sales mask underlying strains like slowing retail growth, Morgan Stanley said in a note last week. The beverage segment continues to be a "bright spot," said Morgan Stanley, which remained overweight on Starbucks.
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