Shares of Starbucks Corp. (SBUX) and Chipotle Mexican Grill, Inc. (CMG) saw a minor dip in pre-market trading on Wednesday, following a significant leadership change at Starbucks.
Starbucks shares were down 0.99% in pre-market trading, following a 24.50% surge on Tuesday. Similarly, Chipotle shares were down 0.33% in pre-market trading, after a 7.50% decrease on Tuesday. This slight dip in both companies’ shares can be attributed to the news that Brian Niccol, the current CEO of Chipotle, will be taking over as the new CEO of Starbucks, replacing Laxman Narasimhan.
The CEO switch at Starbucks has generated considerable discussion among analysts. Opinions are divided on what Niccol’s appointment might mean for the coffee giant’s future. While Wedbush analyst Nick Setyan maintains a Neutral rating on Starbucks with an $80 price target, Baird analyst David Tarantino upgraded Starbucks from Neutral to Outperform and raised the price target from $81 to $110.
Jim Cramer, in his show Mad Money, highlighted the significance of the new CEO for Starbucks. He believes that Niccol will be instrumental in revitalizing the coffee giant, which has been facing challenges in its major markets, namely the U.S. and China. Starbucks recently reported a decline in same-store sales for two consecutive quarters. Cramer stated, “Brian Niccol is the key to a new Starbucks, one that can reclaim its old mantle as the ‘third place’ — you just need to know that this turnaround can’t happen overnight.”
The appointment of a new CEO at Starbucks is a significant event that has the potential to impact the company’s future trajectory. Analysts and investors alike will be closely watching how Niccol navigates the challenges facing Starbucks and whether he can successfully revive the coffee giant’s fortunes.
