Starbucks Corporation (SBUX) stock edged lower Friday as investors weighed reports of a potential acquisition of Chipotle Mexican Grill Inc. (CMG) against concerns over Starbucks' ongoing turnaround.
The Financial Times reported Thursday that Starbucks had spent months consulting advisers about a possible bid for Chipotle, which has a market value of nearly $39 billion.
Together, Starbucks and Chipotle generated nearly $50 billion in revenue last year.
However, it remains unclear whether Starbucks has submitted a formal offer. A deal is far from certain.
Potential Chipotle Deal Raises Turnaround Concerns
The acquisition could rank among the largest deals in restaurant industry history. However, analysts worry it could distract Starbucks CEO Brian Niccol from his 'Back to Starbucks' turnaround plan.
Niccol previously led Chipotle for more than six years, helping the restaurant chain recover from a food-safety crisis.
Wall Street Questions Deal Risks
Seaport Research analyst Eric Gonzalez warned that acquiring Chipotle could complicate Starbucks' recovery.
Meanwhile, Zacks Investment Management's Brian Mulberry cautioned that taking on substantial debt amid rising bond yields could unsettle investors.
Separately, UBS lowered its Starbucks price forecast to $105 from $112 on Thursday while maintaining a Neutral rating.
UBS acknowledged progress in Starbucks' turnaround, citing improving U.S. traffic, comparable sales, digital initiatives and menu changes.
However, consumer spending pressures persist. The firm believes the company's valuation already reflects expectations for a strong multiyear recovery.
Analysts maintain a consensus Buy rating on the stock, with an average price forecast of $111.19.
On Friday, D.A. Davidson maintained its Neutral rating and $110 price forecast. UBS lowered its price forecast to $105 on Thursday while maintaining a Neutral rating. JPMorgan also reduced its price forecast to $105 on Sept. 29 while maintaining an Overweight rating.
Earnings Outlook
Starbucks is scheduled to report its next quarterly results on Oct. 29, 2026.
Analysts expect earnings of 71 cents per share, up from 52 cents a year earlier. Meanwhile, revenue is projected to decline to $9.21 billion from $9.57 billion.
The stock trades at a price-to-earnings ratio of 53.9, reflecting a premium valuation.
ETF Exposure
SBUX has a 17.05% weighting in the Corgi Coffee & Energy Drinks ETF (BATS: BREW). The stock also accounts for 2.91% of the State Street Consumer Discretionary Select Sector SPDR ETF (NYSE: XLY) and 2.55% of the Capital Group Conservative Equity ETF (NYSE: CGCV).
As a result, flows into and out of these funds could influence trading activity in SBUX, depending on fund structure and rebalancing activity.
SBUX Price Action
SBUX Price Action: Starbucks shares were down 0.01% at $93.20 during premarket trading on Friday, according to market data.
