Starbucks' Schultz Stepping Down Signals Business Momentum Will Continue

Starbucks Corporation SBUX announced Thursday chief operating officer Kevin Johnson would replace Howard Schultz as the CEO of the company, effective April 3, 2017.

Bernstein’s Sara H. Senatore maintains an Outperform rating on the company with a price target of $65.

Change In Leadership

Starbucks also announced that Schultz would be appointed the executive chairman.

“While the timing was earlier than we expected, we believe the reorganization announcement in July 2016 set the stage for the leadership change,” Senatore mentioned.

The company earlier announced Schultz would focus more on global strategy, innovation and store development while transitioning some of his direct reports to Johnson.

“Johnson appears to have been an important behind-the-scenes contributor to Starbuck's [sic] post-recession turnaround, and his background in technology should position him well as SBUX continues its transition to a technology-led company,” the analyst went on to say.

Business Momentum To Continue

Senatore believes Johnson’s prior experience with tech companies will prove helpful as Starbucks continues to focus on its digital/loyalty platform.

The analyst expressed optimism that this announcement suggested business momentum was expected to persist.

“We think the focus on Roasteries and Reserve will – along with technological innovation — allow SBUX to stay ahead of coffee competitors,” Senatore added.