Starbucks shares rise as Niccol's turnaround gains momentum

The coffee chain was continuing to assess its North America store portfolio, which could lead to some more closures, executives said on Wednesday at a post-earnings call.

Starbucks would also double down on its efforts to remodel stores, executives said, with the target to complete at least 500 more remodels by the end of the fiscal year.

"Broader macro uncertainty hasn't thrown a wrench in Starbucks' turnaround," said Morningstar analyst Ari Felhandler in a note.

At least three brokerages, including RBC Capital Markets, Morgan Stanley and Jefferies, raised their price targets on the Starbucks stock on Thursday.

"We surmise investors are baking in near-term turnaround growth far into the future ... despite a highly competitive landscape," Felhandler added.

The company's 12-month forward looking price-to-earnings ratio was 35.11, compared with an industry median of 15.37, according to data compiled by LSEG.

Starbucks' shares have risen about 23% so far this year.

Starbucks SBUX.O shares jumped 5.6% in premarket trading on Thursday, after a fourth straight quarter of comparable sales growth and increased annual targets indicated CEO Brian Niccol's efforts were yielding sustainable results.

Niccol's turnaround completes two years in September, and has resulted in Starbucks trying to woo consumers in the United States through a mix of simplifying its menu and revamping its stores to return to its coffeehouse roots.

The company has also tried to reduce wait times and has closed some underperforming stores, including its iconic Seattle roastery.