Starbucks' New CEO Lacks Retail Expertise, But This Analyst Is Bullish: Here's Why

Starbucks Corporation SBUX shares traded down 2.8% on Friday after the company named Laxman Narasimhan CEO, but according to a Wall Street analyst, the coffee-based giant in Seattle is in good hands.

The Analyst: Bank of America analyst Sara Senatore reiterated her buy rating and $109 price target for Starbucks.

Thesis: Prior to joining Starbucks, Narasimhan was CEO of the Reckitt Benckiser Group for three years. Prior to that, he held several management positions at PepsiCo Inc. PEP.

Narasimhan has demonstrated his experience in international markets and his ability to scale a large organization, Senatore explained.

"While Narasimhan does not have the retail/catering experience we might have hoped for, we believe investors hold him in high esteem," Senatore said, quoting the fall in Reckitt's shares after his announced departure.< /p>

The sale of Reckitt stock stands in stark contrast to the negative reaction in Starbucks stock when the company announced the appointment of Kevin Johnson as CEO in 2015, Senatore added.

Benzinga's view: Investors shouldn't over-interpret the negative reaction in Starbucks stock on Friday, given the general weakness in the market that day. The market will have plenty of time to digest Narasimhan as the new head of Starbucks before he officially takes office in April 2023.

Photo: Akyurt Engine from Pixabay.

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