Jefferies Upgrades Starbucks to Hold as China Franchise Exit and U.S. Stabilization Improve Visibility

"Jefferies cites Starbucks's reduced international exposure now that China is being franchised, alongside a stabilizing U.S. business, as the core rationale for the upgrade."

"Starbucks entered a joint venture with Boyu Capital, under which Boyu will acquire up to a 60% interest in Starbucks' retail operations in China, while Starbucks retains a 40% stake."

"The held-for-sale classification reduced monthly expenses by $39 million starting in December, alleviating the heavy capital and operational burden of running China directly."

Starbucks stock increased following Jefferies' upgrade from Underperform to Hold, raising the price target to $92. The upgrade is attributed to reduced international exposure due to the China franchise exit and a stabilizing U.S. business. Starbucks entered a joint venture with Boyu Capital, allowing Boyu to acquire a 60% interest in its China operations. This shift is expected to reduce monthly expenses significantly. The company will still earn revenue through product sales and royalties, alleviating concerns about its China exposure.

Read at 24/7 Wall St.