03:26 PM EDT, 07/21/2025 (MT Newswires) -- Starbucks ( SBUX ) is expected to report weak Q3 results, with continued pressure on US traffic, same-store sales, and earnings, due to slow demand and higher investments, UBS said in a note Monday.

Investors are watching for updates on the company's turnaround strategy, especially the Green Apron Service Model rollout, which now covers about 2,000 stores and could show a modest sales lift, the investment firm said.

Analysts forecast a 2% decline in US same-store sales, driven by a 4% drop in transactions, partly offset by a 2% increase in average ticket size, according to the note.

The company is investing in labor, marketing, menu changes, like the iced horchata espresso, and store operations to drive recovery, with signs of improvement expected in Q4 and into fiscal 2026, UBS said.

Margins remain under pressure from rising labor costs and Brazil tariffs, with Q3 operating margin estimated at 11.4%, down 530 basis points year over year, UBS analysts noted.

The earnings call will likely address updates on China operations, cost savings plans, and store growth, while long-term upside depends on sustained sales and margin recovery, according to UBS.

UBS maintained a neutral rating for Starbucks ( SBUX ) with a $95 price target.

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