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Starbucks Earnings: Cramer Urges Caution

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  Published in Stocks and Investing on Tuesday, January 27th 2026 at 12:16 GMT by CNBC
      Locales: Washington, New Jersey, UNITED STATES

New York, NY - January 27th, 2026 - As Starbucks (SBUX) prepares to release its highly anticipated earnings report this Thursday, investors are bracing for potential volatility. CNBC's Jim Cramer, a well-known and often influential voice in the financial world, is advising a cautious approach, suggesting the stock may be ripe for a temporary correction before presenting a compelling buying opportunity.

Cramer's commentary, delivered on "Squawk on the Street" earlier today, underscored his belief that Starbucks' current valuation is inflated. While acknowledging the company's strong brand and potential for continued growth, he expressed readiness to capitalize on a downturn. His strategy isn't born from pessimism about Starbucks' long-term prospects; rather, it's a calculated move to acquire the stock at a more advantageous price point.

The Premise: Overvaluation and Earnings Expectations

The core of Cramer's argument rests on the perception that Starbucks stock currently trades above its intrinsic value. This isn't an uncommon sentiment amongst analysts, with various reports highlighting the premium investors have placed on the brand in recent years. The upcoming earnings report acts as a crucial data point. If the report fails to meet expectations - perhaps due to slowing sales growth, increased operating costs, or a weaker outlook for future performance - a sell-off could ensue, potentially pushing the stock price down.

Cramer's anticipation hinges on the reaction of the market to the earnings announcement. A negative surprise - a significant miss on revenue or a downbeat forecast - could trigger a wave of selling, creating the buying opportunity he's seeking.

The Plan: A Targeted Re-Entry Point

Cramer's strategy isn't simply about predicting a drop; it's about having a precise plan for when and how to re-enter the market. He has identified a target price range of $90 to $95 per share as a potentially attractive entry point. This level, he implies, would represent a more reasonable valuation for Starbucks, reflecting a fair return on investment given the company's fundamentals and future prospects.

"I think this thing is priced a little too high," Cramer stated, emphasizing his current sentiment. "I'm ready to buy it back, but I want it to go down first." This quote encapsulates the essence of his approach: patience and a willingness to act counter to prevailing market sentiment.

Beyond the Price: Evaluating Starbucks' Long-Term Prospects

While Cramer's immediate focus is on the short-term earnings impact and potential price decline, he acknowledges the critical role of Starbucks' ongoing performance and future guidance in determining its long-term success. Factors such as the company's ability to innovate its menu, adapt to changing consumer preferences (including a potential shift towards alternative milk options and personalized beverages), manage labor costs, and navigate geopolitical challenges will all contribute to its ultimate trajectory.

Furthermore, Starbucks' international expansion remains a key driver of growth. The company's performance in markets like China, where competition is intensifying, will be closely scrutinized. Any signs of slowing growth or increasing competitive pressures could weigh on investor sentiment.

Investor Considerations & Potential Risks

For investors considering following Cramer's strategy, several factors warrant careful consideration. First, market sentiment can be fickle, and even a fundamentally sound company can experience significant price swings due to external factors. Second, the $90-$95 price target is just that - a target. The stock could fall lower, presenting an even better opportunity, or it could rebound quickly, rendering the strategy ineffective.

Finally, attempting to "catch a falling knife" can be risky. A rapid and unexpected decline can be difficult to time accurately, and investors who jump in too early could face further losses. Therefore, a disciplined approach, a clear understanding of the risks involved, and a willingness to adapt the strategy based on evolving market conditions are crucial for success.