Starbucks (SBUX) stock is surging in Tuesday's session after the coffee chain announced the immediate departure of Laxman Narasimhan as CEO. The company also said current Chipotle Mexican Grill (CMG) CEO Brian Niccol will take over the role on September 9. Rachel Ruggeri, chief financial officer at Starbucks, will serve as interim CEO until Niccol comes on board.
"We are thrilled to welcome Brian to Starbucks," said Mellody Hobson, current board chair at Starbucks, in a statement. "His phenomenal career speaks for itself. Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth." Hobson will step down as board chair next month and become lead independent director.
Brian Niccol became CEO of Chipotle in March 2018 after serving as CEO of Taco Bell for several years. During his tenure as head of Chipotle, its stock returned roughly 700%. Today, though, Chipotle stock is sinking on the news of Niccol's departure.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"I am excited to join Starbucks and grateful for the opportunity to help steward this incredible company, alongside hundreds of thousands of devoted partners," said Niccol said in press release, adding that he has "long-admired Starbucks iconic brand, unique culture and commitment to enhancing human connections around the globe."
Niccol is replacing Narasimhan, who has had a tough time during his short tenure as Starbucks CEO. Indeed, through the August 12 close, the large-cap stock had declined more than 20% since Narasimhan was named CEO in March 2023.
Today's news comes just days after the The Wall Street Journal reported that Starboard Value had built a stake in Starbucks, joining fellow activist investor Elliott Management, which has a sizable position in SBUX, in a push for changes at the coffee chain.
Is Starbucks stock a buy, sell or hold?
Despite Starbucks' struggles on the price charts, Wall Street is bullish on the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for SBUX stock is $89.66, representing implied upside 16% to last night's close –
but a 7% discount to current levels. Analysts could upwardly revise their price targets following today's pop. Meanwhile, the consensus recommendation is Buy.
"I cheered at the Starbucks news and on the Starbucks side, because the stock has been a colossal disappointment, as has Laxman. I'm sorry to say that," said Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, in a statement. "It was great to see the board take action, though they had to be prodded by activist investors. But Brian Niccol just worked magic at Chipotle … Niccol will fix Starbucks."
Related Content
-
Mixed August CPI Report Seals September Rate Cut: What the Experts Are SayingCPI A good-but-not great reading on consumer inflation sets up the Fed to reduce rates by a quarter-point at its next meeting.
-
Bank of America Stock Falls As Warren Buffett Keeps SellingBank of America stock is lower Wednesday on news Warren Buffett's Berkshire Hathaway sold another chunk of its stake in the bank. Here's what you need to know.
-
Mixed August CPI Report Seals September Rate Cut: What the Experts Are Saying
CPI A good-but-not great reading on consumer inflation sets up the Fed to reduce rates by a quarter-point at its next meeting.
-
Bank of America Stock Falls As Warren Buffett Keeps Selling
Bank of America stock is lower Wednesday on news Warren Buffett's Berkshire Hathaway sold another chunk of its stake in the bank. Here's what you need to know.
-
Is PLAY Stock a Buy After a Dave & Buster's Earnings Beat?PLAY stock is higher Wednesday after the entertainment and restaurant chain reported strong Q2 earnings, but what does Wall Street have to say?
-
GameStop Sinks on Revenue Drop, Stock Offering: What to KnowGameStop stock is plunging Wednesday after the video-game retailer said sales declined in Q2 and that it's selling shares to raise cash.
-
Saving to Be a 401(k) Millionaire? Plan for Taxes NowYour tax bite in retirement could be excruciating. Here's why super savers need to get serious about protecting themselves.
-
Considering a 721 Exchange? Adopt a Buyer Beware MindsetHaving a tax-smart exit strategy for your real estate investment is a great idea, but if a 721 exchange is part of your plan, here's what you need to consider.
-
Stock Market Today: Stocks End Mixed Ahead of August CPI ReportSharp losses for blue chip banks JPMorgan and Goldman Sachs pressured the Dow Jones Industrial Average.
-
Hewlett Packard Sinks on $1.35 Billion Stock Offering: Why This MattersHewlett Packard stock is spiraling Tuesday after the PC maker said it's selling stock to raise money for its Juniper acquisition. Here's what you need to know.
