Laxman Narasimhan has been sailing through some rough waters lately. The Starbucks (SBUX) CEO, who took over the top spot last year, told analysts in January that the coffee giant has been contending with “some unexpected headwinds, which impacted the rate of growth.”

“We feel very confident about our robust plans to address these challenges,” he said. “While we are already seeing traction, there was an impact in the quarter, and it will take some time to normalize.” Related: Analysts take aim at Tesla stock after Elon Musk makes unpopular decision

The company had missed Wall Street’s fiscal first-quarter expectations, amid falling U.S. and international sales, although Narasimhan maintained that “our performance in the quarter was fundamentally strong.”

Starbucks reported earnings of 90 cents a share, missing FactSet’s call for 93 cents a share. Revenue totaled $9.43 billion, short of analysts’ expectations for $9.59 billion in sales. Global same-store sales increased 5%, below Wall Street’s estimates of 7.2%. North American same-store sales also rose 5%, driven largely by customers spending more on their drinks and food.

The company also lowered its revenue growth estimates for fiscal 2024 and its global same-store sales. Starbucks CEO: ‘We’re engaging audiences’
Narasimhan told analysts that the company “Saw a negative impact on our business in the Middle East,” referring to Hamas’ invasion of Israel. People protested at the company’s stores in cities around the world. In March, Starbucks’ Middle East franchisee, Alshaya Group, began laying off thousands of jobs at its coffee shops due to the boycotts relating to the conflict.

The events in the Middle East also impacted the US, “driven by misperceptions about our position.” Starbucks has also been contending with labor troubles and charges of union busting, which the CEO denied. In addition, Narasimhan said that Starbucks’ occasional US customers, who tend to visit in the afternoon, came in less frequently. The company also experienced a slower-than-expected recovery in China, driven by a more cautious consumer.

“Our most loyal customers remain loyal and, in fact, increased their frequency and spend in the quarter,” he said. “But we did see a softening of US traffic.” Narasimhan said the company “responded quickly to these headwinds,” implementing targeted offers in the U.S. to bring occasional customers into the Starbucks loyalty program.

“We are leaning further into our brand, marketing and factual narrative, and social media to engage these audiences where they are,” he said. “We’ve already seen the positive impact of these new initiatives with our more occasional customers beginning to rebound in December.”

Starbucks is scheduled to report fiscal second-quarter earnings on April 25. Analysts surveyed by FactSet expect the company to earn 81 cents per share on $9.19 billion in sales. Last year, the company earned 75 cents a share on sales of $8.71 billion. Ahead of the company reporting its quarterly results, analysts have revised their stock price targets for Starbucks.

Analyst calls out Starbucks
On Tuesday, Jefferies lowered the firm’s price target on Starbucks to $94 from $100 while keeping a hold rating on the shares. For companies reporting first-quarter earnings through the week of April 29, recent industry data has remained “somewhat choppy,” the analyst told investors.

In a preview for the U.S. restaurant group, the analyst added that the firm sees an opportunity for “modest upside” at Bloomin’ Brands (BLMN) , BJ’s Restaurants (BJRI) , Domino’s Pizza (DPZ,) and McDonald’s (MCD) , while calling out Starbucks, where the firm sees risk relative to Wall Street’s expectations.

On Monday, Deutsche Bank analyst Lauren Silberman cut her price target on Starbucks to $108 per share from $115, keeping a buy rating on the stock. Silberman said that sentiment on Starbucks “is the most negative across our coverage,” which, she said, “is primarily attributable to concerns about U.S. (same-store sales) and limited visibility into the pace & magnitude of a recovery.”

“We think investors expect SBUX to miss in F2Q and lower the FY24 guide, which should reduce some of the overhang on the stock, though we believe investors need greater conviction in the SSS [same store sales] outlook before getting more constructive,” she said.

Silberman said that she expects Starbucks to trim its full-year earnings per share guide to reflect a lower second quarter and potentially more gradual top-line recovery in the second half of the year. “We believe efforts focused on innovation, targeted promotions, and marketing should start to drive improving SSS in F2H,” she said.

Silberman noted that Starbucks launched Spicy Refreshers on April 16 and will launch Summer-Berry Refreshers on May 7, “both unique platforms that should resonate with younger consumers and in the afternoon.”