11:22 AM EST, 01/27/2025 (MT Newswires) -- Starbucks ( SBUX ) fiscal Q1 results are likely to meet expectations, with US sales showing signs of stabilization despite holiday volatility and brief labor strikes, Morgan Stanley said in a note Monday.

The company has faced mixed sentiment due to strikes, fluctuating coffee prices, and Chinese market challenges, but the US performance has shown signs of stabilization recently, the investment firm said.

Starbucks ( SBUX ) is implementing changes such as simplifying menus, improving service times, introducing new products, and reducing discounts to align with market demands, the analysts noted.

Rising coffee prices, particularly due to potential trade issues with Colombia, could affect costs, though these impacts are expected to be more significant in fiscal 2026, according to the note.

The Chinese market remains strong for the brand with potential for a partial stake sale or licensing model, which could free resources for US investments, Morgan Stanley noted.

Morgan Stanley maintained its overweight rating with a $115 price target for the company.

Price: 99.46, Change: +0.65, Percent Change: +0.66