Key Takeaways:
Goldman Sachs initiated Luckin Coffee with a Buy rating and $49 price target, implying 61% upside from the current $30.51.
"Luckin has a meaningful opportunity to expand in mainland China, where our analysis suggests 55,000 stores is attainable," the Goldman Sachs analyst said in a research note.
The brokerage cited Luckin's 28% GMV share of China's fresh-ground coffee market — roughly double that of second-ranked Starbucks — and its 98 million monthly active users as competitive moats. Non-coffee beverages now account for more than 20% of cup volume, broadening the addressable customer base.
The Buy call comes as competition with Cudi Coffee eases after Cudi ended its 9.9 yuan promotion in February 2026. Goldman projects Luckin's non-GAAP operating margin will recover from about 11.5% in 2024-2025 to 14% by 2028, with revenue and non-GAAP net profit growing at 19% and 26% compound annual rates, respectively, over the same period.
The $49 target values Luckin at 21 times estimated 2026 earnings, with a 10% discount applied for its OTC listing. The company's average selling price of about 14 yuan — roughly half of Starbucks' China average and equivalent to 0.4 times the national hourly wage — supports continued penetration in lower-tier cities, Goldman said.
Luckin announced a $300 million share repurchase plan in April 2026, representing about 3% of its market capitalization. The buyback signals the company expects to turn its cumulative losses into cumulative retained earnings by 2026, opening the door for further shareholder returns, the note said.
The initiation adds a prominent Wall Street voice to the bull case on Luckin as the Chinese coffee chain emerges from a two-year price war. Investors will watch second-half 2026 same-store sales trends and margin data for confirmation that the competitive environment is stabilizing.
This article is for informational purposes only and does not constitute investment advice.
