SEATTLE, August 12, 2026, 08:43 EDT
- NOAA forecasts an 81% probability of a very strong El Niño developing later this year.
- The average analyst price target for Starbucks is slightly under the stock’s $106.66 close on Tuesday.
- Coffee contracts offer some protection, though full price certainty is not guaranteed.
Starbucks Corporation NASDAQ:SBUX is encountering a new challenge with coffee prices as the company’s earnings rebound pushes its stock close to the average price target set by analysts. On Tuesday, the stock finished at $106.66, which is nearly aligned with the consensus target of $106.45. U.S. regular trading hours were yet to begin.
Fresh pressure is coming from two separate factors. U.S. meteorologists now give an 81% probability of a very strong El Niño developing from October through December. In addition, a major Colombian earthquake caused arabica futures to spike briefly to $3.26 per pound after it interrupted a major export corridor.
The combination is significant as Starbucks’ margin recovery is already highly valued in its current pricing. While a weather-induced surge in coffee prices may not impact results right away, it could limit further margin improvement in fiscal 2027.
| Market signal | Latest reading | Investor relevance |
|---|---|---|
| High likelihood of strong El Niño | 81% | Raises volatility in crop and food prices |
| Niño-3.4 index, weekly | +1.2°C | Signals El Niño presence |
| Colombian arabica surge | $3.26/lb | Futures affected by supply route disruptions |
| Projected Colombian crop | 12.8 million bags | Reduced from prior 14.8 million |
NOAA estimates a 97% probability that El Niño will persist into early spring 2027. However, even a particularly intense El Niño does not always lead to standard impacts globally. As a result, crop damage should be considered a possible outcome rather than a definitive prediction.
Starbucks begins this phase with improved operational momentum. Global comparable sales increased by 7.9% during the third fiscal quarter. The non-GAAP operating margin widened by 430 basis points to reach 14.4%. The company lifted its forecast for adjusted earnings to $2.55–$2.65 per share.
| Starbucks metric | Fiscal Q2 2026 | Fiscal Q3 2026 | Change |
|---|---|---|---|
| Global comparable sales | +6.2% | +7.9% | up 1.7 points |
| North America comparable sales | +7.1% | +8.1% | higher by 1.0 point |
| Non-GAAP operating margin | 9.4% | 14.4% | gain of 5.0 points quarter-on-quarter |
| Non-GAAP EPS | $0.50 | $0.85 | increased 70% |
Chief Executive Brian Niccol described the quarter as evidence that “an extraordinary cup of coffee, human connection and customer experience win the day.” The results back up this perspective. However, commodity costs continue to offset gains. Starbucks
During the second quarter, costs for products and distribution climbed 17.2%. Revenue was up by 8.8%. Starbucks pointed to tariffs and higher coffee costs as factors weighing on North American margins.
| Coffee exposure as of March 29 | Reported value | Percent of total commitments |
|---|---|---|
| Stock of unroasted coffee | $992.5 million | Not applicable |
| Green coffee commitments at fixed prices | $467 million | 48.4% |
| Green coffee commitments with pending pricing | $497 million | 51.6% |
| Combined reported green coffee commitments | $964 million | 100% |
The commitment mix provides the most transparent indicator for investors. Fixed prices applied to roughly 48.4% of reported commitment dollars. The other 51.6% had prices yet to be set, but Starbucks noted that futures effectively locked in a portion of that sum. These figures reflect publicly disclosed dollar estimates rather than coffee volume.
The hedge structure postpones some losses but does not remove them. The extent of the delay relies on contracts, inventory consumption and futures holdings, which Starbucks does not detail completely.
Valuation offers minimal margin. The mean analyst target of $106.45 is just 0.2% under Tuesday’s closing price. Estimates vary significantly, with targets spanning from $81 up to $137.
| Analyst | Recommendation | Price target | Published |
|---|---|---|---|
| Morgan Stanley | Buy | $111 | July 16 |
| Wells Fargo | Buy | $120 | July 16 |
| TD Cowen | Buy | $120 | May 14 |
| Stifel | Buy | $117 | May 6 |
| Bank of America | Buy | $137 | April 29 |
Recommendations continue to be positive. However, the current share price is above the average consensus target. The stock gained 1.9% on Tuesday, now sitting just 2.4% shy of its 52-week peak.
Risks: El Niño could leave major coffee areas unaffected, and Starbucks might benefit from contractual protections for a longer period than some public estimates indicate. Robust traffic, higher pricing, and efficiency gains may offset higher input costs. However, widespread crop failures risk keeping arabica prices high through fiscal 2027.
The next immediate indicator comes on Thursday, when NOAA releases its updated forecast. Investors will be watching two figures: coffee futures and Starbucks’ operating margin. Coffee futures are climbing. Starbucks’ margin has limited capacity to underperform.
Related articles: NASDAQ:SBUX
