12:34 PM EDT, 10/16/2024 (MT Newswires) -- Starbucks ( SBUX ) might "do a grand reset" when it releases its fiscal Q4 results, or wait to discuss more definite strategic plans, Morgan Stanley said in a note Wednesday.

The investment firm presumes fiscal 2025 to be an "investment year" for the coffee chain and takes into account a "turnaround progress" in its fiscal 2026 and 2027 estimates.

"The setup near term is a bit muddled, but we like the longer-term potential," it said.

Citing weak trends, Morgan Stanley now sees Starbucks' ( SBUX ) fiscal Q4 earnings per share at $1.02, down from its previous forecast of $1.06 and below the consensus estimate of $1.04, as it models a steeper 4% drop in US same-store sales, versus its prior 3% decline projection and the 2% drop reported in the previous quarter.

For fiscal 2025, the firm now sees EPS at $3.71, marked down from its prior forecast of $3.98 and below the consensus estimate of $3.89.

The firm, however, raised its price target to $115 from $98, while maintaining its overweight rating on "multi-year opportunity."

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