Starbucks CEO Change: Why This Won't Be 2000 All Over Again

On Thursday, Starbucks Corporation SBUX announced that Howard Schultz would be stepping down as CEO to take on the role of executive chairman.

BTIG’s Peter Saleh maintains a Buy rating on the company, with a price target of $64.

Executive Change

Mentioning that this executive transition has been a long dreaded one among investors, Saleh stated there was likely to be investor concern regarding this announcement, given the success achieved by Starbucks under Schultz.

“We tend to dismiss comparisons to Mr. Schultz’s previous retirement as CEO (in 2000, returning in 2008) as we believe the brand, retail offering and customer engagement are all much more established today,” the analyst went on to say, conveying that this would offer some confidence that the near- and long-term prospects of the company would not change.

Reasons To Be Positive

However, while the stock might be pressured by investor reaction, Saleh believes Starbucks’ compelling fundamentals and various sales drivers offer sufficient reasons to remain positive.

The company also announced that Kevin Johnson, the current chief operating officer and president, would take on the role of CEO. The changes will go into effect on April 3, 2017.

“In his new role, Mr. Schultz will focus on the company’s emerging retail formats including the Reserve Roastery and Reserve stores and Starbucks’ social impact initiatives. He will also remain chairman,” the analyst noted.