Latest news with #DaniloGargiulo
Yahoo
4 days ago
- Business
- Yahoo
Starbucks (SBUX) May Sell China Stake to Fuel U.S. Comeback, Says Bernstein
Bernstein analysts say Starbucks (SBUX, Financials) might be brewing a bold move; selling its China business for as much as $10 billiona step that could help turn things around for the struggling coffee giant. The potential deal isn't just about cash; it's about control. Offloading the China stake would make Starbucks more asset-light; reducing exposure to China's volatile market, where competition from local brands like Luckin and Cotti has chipped away at market sharedropping it from 42% in 2019 to just 14% in 2024. Analysts led by Danilo Gargiulo think the proceeds could go a long way; maybe toward reinvestments in the U.S. business, including the company's Green Apron initiative, or even be returned to shareholders. Either way, Bernstein sees the move as a potential unlock; something that could finally get the stock moving again. They believe Starbucks might still keep a small stake in the China operations; just enough to benefit from future growth, while letting a local partner chase faster expansion. A $10 billion valuation might be a stretch unless that partner pushes store growth to 15% CAGR; still, even a lower sale could help fund smarter, more focused growth in the U.S. Bernstein is staying bullish; maintaining an Outperform rating and $100 target. Longer-term? They see the stock hitting $135 in the next three yearsif the strategy pays off. This article first appeared on GuruFocus.
Yahoo
7 days ago
- Business
- Yahoo
Starbucks China stake sale may fund turnaround, says Bernstein
-- A potential $10 billion sale of Starbucks' China business could provide the company with financial firepower to accelerate its turnaround strategy, Bernstein analysts said. The broker views the transaction as a possible catalyst for stock re-acceleration, as refranchising would help Starbucks (NASDAQ:SBUX) become more asset-light and reduce exposure to China's volatile geopolitical and competitive landscape. 'We believe that the $10B proceeds could be a further unlock to the stock, as they could be reinvested in the business to accelerate the turnaround,' a team led by Danilo Gargiulo said in a Thursday note. They also see a possibility that some of the proceeds could be returned to shareholders. Starbucks has struggled in China amid rising competition from local brands like Luckin and Cotti, with market share falling from 42% in 2019 to 14% in 2024 and Average Unit Volumes (AUV) down 43%. Under these conditions, Bernstein estimates the China business is worth $5–7 billion if kept under direct ownership. The analysts expect more moderate unit growth of 7–8%, down from the historical 10–15%, as the company focuses on being selective with locations to preserve cash-on-cash returns. Same-store sales are forecast at 2%, while operating margins, which peaked at 15%, are 'unlikely to change in the near future," the analysts added. A $10 billion valuation would imply either aggressive store growth or significantly improved margins, both of which Bernstein sees as challenging. Still, a local partner with a different growth appetite may pursue faster expansion to justify such a price. 'Alternatively, a more likely path for the local partner would be to increase the speed of store openings to a compound annual growth rate (CAGR) of 15% to reach a valuation of $10B,' the analysts wrote. They believe Starbucks would likely retain a stake in the China operations to benefit from future growth. Meanwhile, proceeds from a sale could be used to bolster investments in the U.S. turnaround, including the Green Apron initiative, or be directed toward shareholder returns. Bernstein thinks this strategic shift could support a valuation of over 30x earnings in a normalized post-2028 environment. The broker maintains an Outperform rating on the stock with a $100 price target. It sees potential for a $135 share price within three years, implying 42% upside from current levels. Related articles Starbucks China stake sale may fund turnaround, says Bernstein Roblox stock may rally further as Citi sees more runway growth Piper highlights Meta as best large-cap pick, lifts forecasts on AI strength Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
09-07-2025
- Business
- Business Insider
Bernstein Sticks to Their Hold Rating for Wendy's (WEN)
Bernstein analyst Danilo Gargiulo maintained a Hold rating on Wendy's yesterday and set a price target of $15.00. The company's shares closed yesterday at $11.29. Don't Miss TipRanks' Half-Year Sale Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Gargiulo covers the Consumer Cyclical sector, focusing on stocks such as Starbucks, Chipotle, and CAVA Group, Inc.. According to TipRanks, Gargiulo has an average return of -0.6% and a 49.28% success rate on recommended stocks. In addition to Bernstein, Wendy's also received a Hold from BTIG's Peter Saleh in a report issued yesterday. However, on the same day, Goldman Sachs maintained a Sell rating on Wendy's (NASDAQ: WEN). Based on Wendy's' latest earnings release for the quarter ending March 30, the company reported a quarterly revenue of $219.51 million and a net profit of $39.23 million. In comparison, last year the company earned a revenue of $534.75 million and had a net profit of $41.99 million Based on the recent corporate insider activity of 57 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of WEN in relation to earlier this year. Most recently, in May 2025, Kenneth M. Cook, the CFO of WEN bought 1,500.00 shares for a total of $17,025.00.
NBC News
10-06-2025
- Business
- NBC News
China's homegrown coffee giants are brewing up a U.S. expansion
Chinese beverage chains are redefining coffee culture in the country — and now they're trying to win over customers in the U.S. and beyond. Luckin Coffee, China's largest coffee chain, has expanded aggressively in China and overtaken Starbucks on the mainland, with more than twice as many outlets. Following an accounting fraud scandal that got the company delisted from the Nasdaq in 2020, Luckin has staged an unlikely comeback with quirky flavors and steep discounts — as low as $1.40 per cup during an earlier price war with rival Cotti Coffee. The Wall Street debacle hasn't dampened Luckin's ambitions in the U.S., where it still trades over the counter. After venturing into Singapore, Hong Kong and Malaysia, Luckin is set to take its biggest leap yet with plans to open a branch in Lower Manhattan. The move mirrors Cotti's, which just opened outlets in Brooklyn and Manhattan. Founded in 2022 by former Luckin executives who were ousted over the scandal, Cotti has also grown rapidly in China and internationally, with stores in locations ranging from Southeast Asia to Dubai and California. 'New York is probably culturally the best testing ground for an international brand to expand into, especially a Chinese one,' said Bernstein Senior Analyst Danilo Gargiulo, citing the city's diversity and large base of young consumers. 'But it's also the most saturated, one of the most competitive markets.' Chinese chains combine budget pricing with unusual flavors that often blur the line between coffee and bubble tea — jarring to purists but extremely popular at home. Luckin said its alcohol-infused latte, developed with China's leading Moutai liquor maker, sold more than 5.4 million cups on its first day in 2023, generating over $13.7 million in sales. The company launched 119 different items in 2024 alone. Luckin has built its business around technology, allowing customers in China to order and get deliveries through the country's ubiquitous WeChat app, replacing the traditional cafe experience with hyper efficiency. The company also runs large coffee-bean roasting and processing operations in China to help drive down costs. The question is whether this will work in America. Luckin and Cotti did not respond to requests for comment from CNBC. On an earnings call in April, Luckin's co-founder Guo Jinyi said the company plans to 'adopt flexible, locally tailored models' to steadily expand overseas. Slowing growth and intense competition in China has pushed companies to seek opportunities beyond its borders. Coffee price wars From electric car makers to food delivery platforms, large-scale Chinese companies often follow a familiar strategy: burn cash, grab market share, worry about profit later. This helps them grow fast, but can infuriate global competitors. In the latest sign of increasing competition in China, Starbucks on Monday said it will lower the prices of dozens of drinks in the country by an average of $0.70 this summer. In New York, Cotti is selling drinks for 99 cents to first-time customers who download its app. Over time, analysts estimate that Luckin and Cotti will still be cheaper than Starbucks in the U.S., but the gap will be narrower than it is in China. Manhattan may share major Chinese cities' love for efficiency, but businesses there face New York wages and may need to accept additional payment options, adding to costs, said Allison Malmsten, China strategy director at Daxue Consulting. Tariffs on Chinese businesses may further erode their supply-chain advantages, she added. 'There's a long list of things that could potentially drive the price up,' Malmsten said. If Luckin's New York debut proves successful, the company could venture further afield. HeyTea — a Chinese chain known for topping its teas with foamy cream cheese — landed in New York in late 2023 and has since spread to Boston, Seattle and Los Angeles. Despite tensions between Washington and Beijing, Gen Z and younger Americans tend to perceive China differently than older generations, who may associate Chinese products with lower quality, according to Malmsten. Bargain coffee from Chinese chains could also appeal to New Yorkers facing rising costs on everything from groceries to coffee beans. Still, coffee shops that run on thinner margins need volume, analysts say. This means appealing to a wider range of customers. 'If it's perceived as being only a touristy or exotic adventure, then it's not going to become part of your day-to-day consumption, it's not going to become part of your morning routine,' Bernstein's Gargiulo said.
CNBC
09-06-2025
- Business
- CNBC
China's homegrown coffee giants are brewing up a U.S. expansion
Chinese beverage chains are redefining coffee culture in the country — and now they're trying to win over customers in the U.S. and beyond. Luckin Coffee, China's largest coffee chain, has expanded aggressively in China and overtaken Starbucks on the mainland, with more than twice as many outlets. Following an accounting fraud scandal that got the company delisted from the Nasdaq in 2020, Luckin has staged an unlikely comeback with quirky flavors and steep discounts — as low as $1.40 per cup during an earlier price war with rival Cotti Coffee. The Wall Street debacle hasn't dampened Luckin's ambitions in the U.S., where it still trades over the counter. After venturing into Singapore, Hong Kong and Malaysia, Luckin is set to take its biggest leap yet with plans to open a branch in lower Manhattan. The move mirrors Cotti's, which just opened outlets in Brooklyn and Manhattan. Founded in 2022 by former Luckin executives who were ousted over the scandal, Cotti has also grown rapidly in China and internationally, with stores in locations ranging from Southeast Asia to Dubai and California. "New York is probably culturally the best testing ground for an international brand to expand into, especially a Chinese one," said Bernstein Senior Analyst Danilo Gargiulo, citing the city's diversity and large base of young consumers. "But it's also the most saturated, one of the most competitive markets." Chinese chains combine budget pricing with unusual flavors that often blur the line between coffee and bubble tea — jarring to purists but extremely popular at home. Luckin said its alcohol-infused latte, developed with China's leading Moutai liquor maker, sold more than 5.4 million cups on its first day in 2023, generating over $13.7 million in sales. The company launched 119 different items in 2024 alone. Luckin has built its business around technology, allowing customers in China to order and get deliveries through the country's ubiquitous WeChat app, replacing the traditional cafe experience with hyper efficiency. The company also runs large coffee-bean roasting and processing operations in China to help drive down costs. The question is whether this will work in America. Luckin and Cotti did not respond to requests for comment from CNBC. On an earnings call in April, Luckin's co-founder Guo Jinyi said the company plans to "adopt flexible, locally tailored models" to steadily expand overseas. Slowing growth and intense competition in China has pushed companies to seek opportunities beyond its borders. From electric car makers to food delivery platforms, large-scale Chinese companies often follow a familiar strategy: burn cash, grab market share, worry about profit later. This helps them grow fast, but can infuriate global competitors. In the latest sign of increasing competition in China, Starbucks on Monday said it will lower the prices of dozens of drinks in the country by an average of $0.70 this summer. In New York, Cotti is selling drinks for 99 cents to first-time customers who download its app. Over time, analysts estimate that Luckin and Cotti will still be cheaper than Starbucks in the U.S., but the gap will be narrower than it is in China. Manhattan may share major Chinese cities' love for efficiency, but businesses there face New York wages and may need to accept additional payment options, adding to costs, said Allison Malmsten, China strategy director at Daxue Consulting. Tariffs on Chinese businesses may further erode their supply-chain advantages, she added. "There's a long list of things that could potentially drive the price up," Malmsten said. If Luckin's New York debut proves successful, the company could venture further afield. HeyTea — a Chinese chain known for topping its teas with foamy cream cheese — landed in New York in late 2023 and has since spread to Boston, Seattle and Los Angeles. Despite tensions between Washington and Beijing, Gen Z and younger Americans tend to perceive China differently to older generations, who may associate Chinese products with lower quality, according to Malmsten. Bargain coffee from Chinese chains could also appeal to New Yorkers facing rising costs on everything from groceries to coffee beans. Still, coffee shops that run on thinner margins need volume, analysts say. This means appealing to a wider range of customers. "If it's perceived as being only a touristy or exotic adventure, then it's not going to become part of your day-to-day consumption, it's not going to become part of your morning routine," Bernstein's Gargiulo said.
