Starbucks’ appointment of former Chipotle CEO Brian Niccol as its new CEO has sent ripples through the financial world, prompting a wave of analysis and speculation. While some analysts are optimistic about the move, others are more cautious.
Wedbush analyst Nick Setyan, who maintains a Neutral rating on Starbucks, expressed reservations about Niccol’s ability to replicate his success at Chipotle within the coffee giant. Setyan argues that Starbucks, with its global presence and decades of established practices, represents a different challenge than Chipotle. He believes that Niccol’s familiarity with the fast-food industry, gained through his stints at Taco Bell and Chipotle, may not translate seamlessly to Starbucks’ more complex operations.
However, Baird analyst David Tarantino holds a contrasting view. Tarantino upgraded Starbucks from Neutral to Outperform, raising the price target from $81 to $110. He believes Niccol’s expertise in brand management and driving robust results at Chipotle, coupled with his past experience at Yum! Brands and Procter & Gamble, positions him to successfully navigate Starbucks’ current challenges. Tarantino highlights Niccol’s potential to strengthen Starbucks’ internal operations and foster healthier growth in the years ahead.
Beyond Wall Street, other industry experts also weigh in on the move. R.J. Hottovy, Placer.ai’s head of analytical research, believes Niccol’s arrival could invigorate Starbucks’ product development and advertising strategies. He cites Chipotle’s impressive revenue growth, fueled by new menu items and engaging marketing campaigns, as evidence of Niccol’s capabilities. However, it’s important to note that Starbucks’ recent revenue performance has lagged behind Chipotle’s.
Activist investor Elliott Management, which has been building a stake in Starbucks, expressed its support for the CEO appointment. They view Niccol’s arrival as a significant step forward for the company and are confident in Starbucks’ long-term value creation potential.
The appointment of Brian Niccol as CEO of Starbucks is a significant development with potential to shape the future of the coffee giant. Whether his expertise in the fast-food industry can translate into success for Starbucks remains to be seen, but the appointment has certainly generated a buzz among analysts, investors, and industry insiders alike.
