A tech giant and a major coffee chain were subjects of significant discussion on Thursday, with notable updates from Bank of America and Bernstein. Bank of America increased its price target for Meta Platforms, while Bernstein upgraded Starbucks.
Bank of America raised its price target for Meta Platforms to $630 from $563, suggesting more than a 10% upside. Analyst Justin Post maintained his buy rating on the company, following Meta’s unveiling of the Quest 3S VR headset and the Orion AR smart glasses at their recent Connect event. Post noted that these glasses possess broader market potential compared to previous products. The Connect event focused on hardware innovation in the Metaverse and advancing artificial intelligence (AI) capabilities. Post expressed that despite challenges in justifying Metaverse spending, long-term investors may find new optimism in Meta’s potential to lead the next generation of personal computing devices. He highlighted Meta’s advancements in AI, which are driving usage growth and mitigating terminal value concerns. Post also identified Meta as the leading AI-related pick in the consumer internet space. In response, Meta’s shares rose over 1% in premarket trading and have increased by more than 60% this year.
Meanwhile, Bernstein upgraded Starbucks, citing the positive impact of Brian Niccol’s recent appointment as CEO. Analyst Danilo Gargiulo upgraded the coffee chain’s stock to outperform from market perform and raised the price target to $115 from $92, implying a 20% upside. Gargiulo believes Niccol’s previous experience at Taco Bell and Chipotle makes him well-suited to guide Starbucks through its current turnaround. Niccol’s role as CEO and Chairman of the Board is expected to allow management to focus on operational stability rather than solely pursuing growth. Since Niccol took over as CEO on September 9, Starbucks shares have risen nearly 5%. Gargiulo anticipates that improvements in store operations, brand perception, and innovation will lead to positive traffic growth, despite potential decreases in drink customization affecting same-store sales. Starbucks shares are flat for the year but have increased by over 20% in the past three months.
