Starbucks Stock Downgraded Amid CEO ‘Overdone Hype’

New Starbucks CEO Brian Niccol’s tenure has already been marred by what experts are calling “overdone hype” as the coffee chain’s stock receives a downgrade.

Yahoo! Finance is reporting that because of “a lot of uncertainty over the next 12 months” and the “big run” in the shares of the coffee giant since Brian Niccol of Chipotle was chosen as CEO, Jefferies analyst Andy Barish downgraded the company’s shares to Underperform and dropped his price objective to $76.65.

Starbucks’ stock has increased by almost 30% since Aug. 1, to about $95, and Barish called this hype “overdone,” according to Bloomberg. In a message to clients, Barish expressed his expectation that “the stock will stall here and begin to retrace the ‘Niccol gains’ particularly as fundamentals become more of the focus.”

Additionally, Barish anticipates that the fiscal year 2025 and the fiscal fourth quarter guidance would “disappoint,” with same-store sales decreasing and EPS growth in the low single digits.

2025, according to Barish, is a “throwaway” year for the coffee chain as it tries to stabilize the company and reinvest to perhaps recover in fiscal 2026 and beyond.

Starbucks’ New CEO Was Thought To Be a ‘Win’ for the Company

Last week, Starbucks’ new CEO was being hailed as a “win” for the company. Niccol shared his reflections on learnings from talks with partners and consumers in a letter to the public. He pointed out that although Starbucks is a well-liked brand, there’s a feeling that it has lost its direction.

“Starbucks was founded on a love for high quality coffee — handcrafted by our outstanding green apron partners and enjoyed with intention. Coffee is our heart,” he said in the open letter.

Niccol presented a strategy centered on four key objectives to rejuvenate the in-store experience:

• Enabling baristas to better serve consumers by providing them with the necessary time and resources
• Increasing the reliability of morning service to live up to client expectations
• Improving the atmosphere within the store to make Starbucks once again a “community coffeehouse”
• Reiterating the brand’s story to remind consumers of what makes Starbucks unique

In the end, he pledged to take Starbucks back to its original status as a warm, inviting café that offers excellent coffee. He also emphasized the need to comprehend growth prospects in international markets such as Asia Pacific and China, initially concentrating on direct engagement with suppliers and store teams to realign with core principles.