12:07 PM EDT, 05/01/2024 (MT Newswires) -- Starbucks' ( SBUX ) fiscal Q2 performance was worse than anticipated, marking a "historically weak quarter," Morgan Stanley said in a report Wednesday.

The forecast for the fiscal year has been reduced, shifting expectations for growth to the next year, Morgan Stanley said, adding that "[t]he worst may be in, and numerous plans to improve were laid out - building credibility, like comps, maybe takes some time."

US same-store sales dropped by 3% compared to an expectation of more than 1.2%, similarly, China experienced a decline of 11% against an expected 2%. Operational margin stood at 12.8%, lower than the expected 14.4%, with EPS at $0.68 compared to the expected $0.80, Morgan Stanley said.

The brokerage said the company's long-term growth depends on several sales drivers and correcting some recent actions, as well as implementing cost efficiency measures.

Starbucks ( SBUX ) predicts flat to slightly declining same-store sales in the US and globally, with reduced global net unit growth of around 6%. This adjustment lowers the total revenue growth forecast to low single digits, the report said.

Morgan Stanley has an overweight rating on Starbucks ( SBUX ) and lowered its price target to $104 from $115.

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