Leadership can make all the difference, as Starbucks (NASDAQ: SBUX) stock showed with its biggest one-day gain in history, rising 24.5%, after the company named former Chipotle (NYSE: CMG) CEO Brian Niccol as its new boss.
Niccol became CEO of Chipotle in 2018, and since then, CMG stock has risen 773%, outperformed by only nine S&P 500 companies during that time.
His impact on SBUX stock was immediate, with the stock’s 24.5% gain for the day representing an increase of over $20 billion in Starbucks’ market capitalization, and investors and analysts reacted positively to the news of his appointment.
Wall Street optimistic about Starbucks shares after new CEO
The appointment of Brian Niccol as Starbucks’ new CEO sparked a wave of optimistic analyst reports on Wall Street, given his record of excellence in leading food and beverage companies.
On August 13, BMO Capital maintained its “outperform” rating and a $100 price target on SBUX shares. The firm views the new appointments as a strategic move that will improve the beverage company’s performance in key areas and drive its revenue growth.
Stifel Nicolaus upgraded Starbucks shares from “hold” to “buy” and raised the price target from $80 to $110. Stifel analysts believe the new CEO will address important issues that have long been troubling the coffee giant, such as a clear growth strategy and its implementation.
In another positive upgrade, TD Cowen raised its rating on SBUX stock from “Hold” to “Buy” while increasing its price target from $81 to $105. Analysts see Starbucks founder Howard Schultz’s endorsement as a seal of approval and have confidence in the new appointment among their investor base.
On the same day, Morgan Stanley maintained its Overweight rating and $98 price target on Starbucks stock. Experts note that Niccol will continue to emphasize the coffeehouse giant’s global presence and implement necessary changes to address past deficiencies.
In a new high on Wall Street, analysts at Evercore ISI raised Starbucks’ rating to “outperform” and set a $120 price target on SBUX stock, believing the new CEO will hit margin targets and drive earnings growth – two metrics that have been declining over the previous two quarters.
The general SBUX stock sentiment on Wall Street will change
As major financial institutions change their stance on SBUX stock, the uptrend is expected to be followed by positive upgrades from other analyst firms.
Wall Street analysts currently rate SBUX stock as a “moderate buy” based on 27 reviews. Of these, 9 recommend “buy,” 18 recommend “hold,” and none recommend “sell.”
The average price target is $86.26, a level that Starbucks shares have already exceeded, and represents a downside potential of 10.05 percent from the last closing price of $95.90.
Given the overall bullishness surrounding Niccol as Starbucks’ new CEO and his strong track record at companies like Chipotle Mexican Grill, Taco Bell and Pizza Hut, his expertise is bound to have a positive impact on SBUX stock.
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