Starbucks (SBUX) is reporting earnings again soon, on Oct. 28, and its stock is under some pressure heading into the report. SBUX shares closed at $94.71 on Friday, Oct. 2, down about 10.5% over the past month.
CEO Brian Niccol‘s plan to turn the company’s situation around is also facing some scrutiny from Wall Street.
However, Bank of America still maintains its stance on the stock. On Oct. 1, BofA analyst Sara Senatore kept her Buy rating on Starbucks and her $143 price target. That is about 51% above where the stock closed on Oct. 2.
She maintained her outlook because BofA just conducted a survey that showed how customers feel about Starbucks’ AI tools in the mobile app and ordering process. The results from the survey were better than many investors would expect.
Senatore’s bullish case for Starbucks before earnings
Senatore has covered consumer and restaurant stocks for more than 20 years and spent years at Bernstein before joining Bank of America Securities. Her ratings draw a lot of attention from both other analysts and major institutional investors.
Also read: Starbucks changes iconic recipe, angering customers again
In her note, she argued that technology is becoming a real growth driver for Starbucks, even though customer traffic hasn’t really been stable.
“Starbucks is using technology and AI to simplify operations and personalize digital interactions,” Senatore wrote. “The technology frees up partners to spend more time on customer service and hospitality.”
Starbucks earns most of its money from company-run stores that sell coffee, tea, food, and bottled drinks. The rest of its profits come from licensed stores and packaged products sold in grocery stores through Nestlé.
The results of BofA’s AI survey
According to a BofA global research report shared with me, 66% of people who order before going to the store said the whole process felt faster, and 67.5% of customers said the time they spent waiting to pick up their orders felt shorter than when they visit the store directly.
The survey also showed that 59.8% of users felt more confident that their drink was ready because the app showed an estimated wait time.
Related: Starbucks CEO reveals what he thinks will keep customers coming back
The company’s personalized recommendations strategy also got some positive feedback. About 63.1% of users said the suggestions made them consider trying new product options.
That is good news for a company trying to increase the average amount people spend per visit. Only a few people, about 4.1%, found the recommendations distracting.
