Starbucks Target Price Raised to $120; Q3 Revenue $9.32 Billion, EPS $0.85

North America same-store sales rose 8.1%, with U. S. same-store sales up 7.9%, driven by both transaction volume and average ticket.

Starbucks shares rose more than 5% in after-hours trading following the earnings release, approaching $110 per share. Year to date through 2026, Starbucks shares have gained 23.7%, outperforming the S&P 500's 6.9% gain and also beating the S&P 500 consumer discretionary sector, which declined 6.5% over the same period. The sector was partly dragged down by inflation and consumer health concerns stemming from the Iran war.

Chief Executive Officer Brian Niccol launched the "Back to Starbucks" transformation plan in fall 2024, which includes adding staff to reduce wait times and improving store environments. Third-quarter results showed global same-store sales growth of 7.9%, North America growth of 8.1%, and U. growth of 7.9%. Niccol said sales growth was balanced across generations, income groups, and between members and non-members. Morning daypart saw the strongest growth, while the afternoon daypart also showed momentum. The company is strengthening afternoon performance by launching energy drinks and testing new food options such as wraps. The food attach rate at U. company-operated stores reached a record in the third quarter.

Part of the profit growth came from tariff refunds from the U. government, but excluding the tariff impact, overall and North America operating margins still expanded year over year. Chief Financial Officer Cathy Smith said the fundamental factors driving margin expansion in the third quarter will continue into the fourth quarter, including cost-saving initiatives, rigorous execution, and sales leverage. Starbucks is on track toward its 2028 target of achieving an operating margin of 13.5% to 15%.

This was the first full quarter after Starbucks converted its China business into a joint venture with a Chinese private equity firm, so total company revenue declined slightly year over year. Starbucks used proceeds from the transaction to repay $1.3 billion in debt.