Starbucks Corp. (NASDAQ:SBUX) is set to report its first-quarter fiscal 2026 earnings on Jan. 28, facing a critical test of CEO Brian Niccol's “Back to Starbucks” strategy. While management points to recovering U.S. traffic, key analysts warn that the operational costs required to achieve that growth may trigger a stock correction.

Consensus Vs. The ‘Unsupported Rally’

Wall Street expects Starbucks to report earnings per share (EPS) of $0.58, a significant decline from the $0.69 reported in the same quarter last year, despite a projected revenue increase to $9.64 billion, according to Benzinga.

Amid these muted expectations, Jefferies analyst Andy Barish has reiterated an “Underperform” rating with a $75 price target, labeling the stock's recent performance an “unsupported rally.”

According to an X post shared by Wall St Engine, Jefferies warns that the upcoming earnings and the subsequent Investor Day on Jan. 29 could “disappoint & overpromise,” potentially leading to downside throughout fiscal 2026.

The ‘Green Apron’ Margin Squeeze

The central tension lies in the “Green Apron Service” standard, which was fully deployed across the U.S. portfolio in August 2025.

This initiative, designed to improve throughput and customer connection through increased staffing and better order sequencing, enters its first full quarter of impact in the first quarter.

While CEO Niccol noted that U.S. transactions turned positive in September and October, Jefferies argues that the associated costs—specifically “labor reinvestment continuing” and the rollout of Assistant Store Managers—will challenge margins in the first half of the year.

Jefferies predicts that even a low-single-digit sales increase may not be enough to generate meaningful operating margin leverage given these heavy reinvestment costs.

Revenue First, Earnings Later

Management has been transparent about this financial disconnect. CFO Cathy Smith explicitly stated in the fourth quarter call that the company expects to “grow the top line first, and then earnings will follow,” acknowledging that investments would pressure near-term profits.

The company is banking on a strong holiday performance, driven by the return of classics like the Eggnog Latte, to support its revenue targets.

A Divided Street

Not all analysts share the bearish outlook. Bank of America has maintained a “Buy” rating with a $114 price target, citing long-term growth potential in China despite current deflationary headwinds.

Meanwhile, Mizuho remains neutral, advising investors to wait for the clearer long-term financial targets expected at the Jan. 29 Investor Day.

SBUX Jumps Over The Last Month And YTD

Shares of SBUX have jumped 12.57% over the last month and 14.72% in 2026 so far. It was up 2.84% over the last six months but down by 3.69% over the year.

Benzinga’s Edge Stock Rankings indicate that SBUX maintains a strong price trend over the short, medium, and long terms with a poor value ranking.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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