Analyst Warns Starbucks Faces Growing Risks From Competition, Costs, and Global Tensions

Guggenheim analyst Gregory Francfort reiterated the Neutral rating on Starbucks Corporation SBUX on Tuesday, lowering the price forecast from $95 to $83.

Starbucks reported second-quarter fiscal year 2025 financial results after market close on Tuesday.

Starbucks reported Q2 revenue of $8.76 billion, missing the $8.86 billion analyst estimate, and adjusted EPS of $0.41, below the $0.50 consensus.

Consolidated net revenue rose 2% year-over-year, but global comparable store sales fell 1% (transactions down 2%, average ticket up 1%), with North America down 1%, international down 2%, and China flat.

Also Read: How To Earn $500 A Month From Starbucks Stock Ahead Of Q2 Earnings

In the note issued on Monday, Francfort cited rising competition from local brands like CHA, the impact of the trade war, and potential resistance to U.S. brands as factors that add to the risks for Starbucks.

Margin expansion forecasts are lowered, with 2027 EBIT margins now seen improving by ~150 basis points over 2025, down from ~270 basis points previously.

This adjustment factors in expected relief in arabica coffee prices, currently stuck above $4 per pound but forecast to dip to the low $3s by late 2026, the analyst writes.

Meanwhile, Starbucks’ U.S. workforce has shrunk about 3% over five years even as store count rose 12%, suggesting continued pressure on managing store operating costs.

Francfort notes that Starbucks, being a discretionary purchase, could face added pressure if consumer conditions deteriorate further.

SBUX Price Action: Starbucks shares were down 1.24% in the after-hours session, trading at $83.80 at the time of publication Tuesday, per Benzinga Pro data.

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