Morgan Stanley Upgrades Starbucks (NASDAQ: SBUX): A Deep Dive into its Financial Turnaround

Font: Financial Modeling Prep  • May 14, 2026

• Starbucks (NASDAQ: SBUX) received an "Overweight" rating from Morgan Stanley, signaling analyst confidence in its potential to outperform peers following a significant financial turnaround.
• The company reported strong Q1 2026 results, with revenue growing 8.79% year-over-year to $9.53 billion and adjusted earnings per share (EPS) of $0.50, driven by a 6.2% increase in global comparable sales.
• Despite positive momentum, Starbucks faces valuation concerns, trading at nearly 30 times its forward earnings, and competitive pressures from rivals like Luckin and Chipotle.

Morgan Stanley upgraded its rating for Starbucks (NASDAQ: SBUX) to Overweight on May 14, 2026, when the stock was at $107.84. An Overweight rating suggests an analyst believes the stock will outperform its industry peers. Starbucks is a global coffee company known for its thousands of retail stores worldwide.

The upgrade follows a significant turnaround for Starbucks. Under CEO Brian Niccol, the company's "Back to Starbucks" plan helped deliver a 6.2% increase in global comparable sales. This metric, which tracks sales at stores open for at least a year, ended a seven-quarter streak of flat or declining sales.

Financially, the company reported strong results for the quarter ending in March 2026. Revenue grew 8.79% year-over-year to $9.53 billion, while its adjusted earnings per share (EPS) of $0.50 beat estimates. The North American market saw a 7.1% rise in comparable sales and a 37.79% jump in operating income.

However, some analysts note potential risks. The stock trades at nearly 30 times its forward earnings. This valuation metric suggests investors are paying a high price for Starbucks shares based on expectations of future growth, which, as highlighted by Seeking Alpha, is not yet proven.

Concerns also include North American margins being down 170 basis points year-over-year, meaning profitability in the region has slightly decreased. The company's revenue growth also lags behind competitors like Luckin and Chipotle. Despite this, as highlighted by Fast Company, Starbucks is opening hundreds of new stores.