Investing.com -- TD Cowen downgraded Starbucks (NASDAQ: SBUX ) from Buy to Hold in a note Thursday, maintaining a price target of $90 per share on the stock.

The firm warned that investor expectations may not fully reflect the company’s long-term margin and earnings outlook.

“We forecast Starbucks settling into a new 2026-28 EPS base vs. consensus that does not appear to be considering labor investments central to the turnaround,” TD Cowen analysts wrote.

They cautioned that value perceptions are weakening, which could delay a return to normalized same-store sales (SSS).

Citing proprietary survey data, TD Cowen said, “So far in calendar 2025, proprietary survey data suggests deteriorating value perceptions and narrowing quality perceptions for Starbucks relative to peers.”

The bank adds that the trend appears to be translating into “a reduced frequency of customers who visit at least weekly,” a key metric that correlates strongly with U.S. traffic.

The firm also sees structural margin pressure ahead, noting that CEO Brian Niccol’s turnaround strategy resembles that of Chipotle (NYSE: CMG ) but will likely come with higher operating expenses.

TD Cowen now models 2026-28 EPS of $2.80, $3.17, and $3.81—roughly 10% below consensus expectations. Analysts also forecast North America EBIT margins of 14.8%-15.3%, below consensus estimates of 15.8%-17.9%.

TD Cowen said the decision to hold back price increases and expand labor hours suggests “Starbucks over earned in the 2-3 years post COVID.”

With historical underperformance during economic downturns and growing competition, the firm believes Starbucks’ aggressive growth plans—especially for smaller-format drive-thru locations—could face headwinds.