Starbucks Huge 2026 Rally

One of the dogs of the stock market is in rally mode. Starbucks Corp. (NASDAQ: SBUX | SBUX Price Prediction) stock is up almost 15% this year. The S&P 500 is barely flat. This is a huge departure from Starbucks’ longer-term numbers. Over the past five years, the stock is down 7%, while the S&P 500 is 80% higher.

There is a bit of optimism about the company’s future. Even Jim Cramer, the 70-year-old grandfather of Wall Street analysts, expects CEO Brian Niccol to turn the coffee company around. He said on CNBC, “Alright, well, let me retort with the fact that I think that Brian Niccol is going to pull off this turnaround.” Cramer listed the problems that Niccol was in the process of repairing.

Another key Starbucks analyst lifted a price target considerably. Sara Senatore of BofA Securities raised her $106 target to $114. She already rates the stock at Buy. The shares trade near $96 today.

Is the Optimism Warranted?

When Starbucks releases its first-quarter 2026 earnings report on January 28, the optimism about the stock will be rewarded (or not). The gating question is whether same-store sales, particularly in the United States, will rise. On that yardstick, the numbers have disappointed investors quarter after quarter.

Niccol has been open about his plans. He cut the number of menu items, in part to speed up how quickly customer orders are fulfilled. Some stores were closed and others upgraded. He has set a uniform for store workers and cut some middle management. He will prove (or not) whether what he said on the most recent earnings call is right: “We’re a year into our ‘Back to Starbucks’ strategy, and it’s clear that our turnaround is taking hold.” The evidence of that has been nonexistent.

Starbucks continues to have competition and pricing headwinds. There are other chains with stores on every block, particularly McDonald’s and Dunkin’ Donuts. Each, particularly McDonald’s, has chopped prices to bring in budget-minded customers. Starbucks is at the premium end of this fast-food spectrum. So, it is up against the public’s concerns about “affordability.”

Affordability may be Starbucks’ largest enemy, as much of the industry is going down-market on prices.

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