TD Cowen Just Upgraded Starbucks to Buy: Margin Recovery, Sales Drivers Power Comeback Story

"TD Cowen upgraded Starbucks to Buy from Hold and raised its price target to $120 from $106, calling out "numerous tangible drivers" that should fuel positive sales revisions against a strong category backdrop. The call lands as Starbucks shares trade near multi-month highs following a decisive Q2 FY2026 beat."

"TD Cowen's thesis hinges on two pillars: sales momentum and margin recovery. After meeting with management, the firm expressed confidence that Starbucks can deliver sales and earnings upside sufficient to justify its above-consensus fiscal 2028 estimates. That longer-dated conviction matters more than a typical target bump."

"The firm flagged that Starbucks is prioritizing labor investments and that margins will recover as operational gains compound. Faster service, menu innovation, and throughput improvements are the "tangible drivers" underpinning the call."

"Q2 FY2026 marked a clear inflection: adjusted EPS of $0.50 beat the $0.44 consensus, revenue rose 9% year over year (YoY), and global comparable store sales jumped 6%. On the Q2 FY2026 call, Niccol declared, "Q2 marked a milestone for the business. We delivered growth on both the top and bottom line for the first time in more than 2 years.""

Starbucks was upgraded to Buy by TD Cowen, which raised its price target to $120 from $106. The upgrade cites numerous tangible drivers expected to support positive sales revisions within a strong category backdrop. The call follows Starbucks shares trading near multi-month highs after a decisive Q2 FY2026 beat. TD Cowen’s thesis rests on sales momentum and margin recovery, supported by confidence that Starbucks can deliver sales and earnings upside beyond consensus fiscal 2028 estimates. Starbucks is prioritizing labor investments, with margins expected to recover as operational gains compound through faster service, menu innovation, and improved throughput. Q2 FY2026 showed adjusted EPS of $0.50 versus $0.44 consensus, revenue up 9% year over year, and global comparable store sales up 6%.

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