Deutsche Bank Downgrades Starbucks (SBUX) to Sell; Prefers McCafe - Maintains Hold on McDonald's (MCD)

April 15, 2009 9:07 AM EDT

Deutsche Bank downgrades Starbucks (Nasdaq: SBUX) from Hold to Sell.

Deutsche analyst says, "The slow response to an oversaturated store base (more must close) is exacerbated by a new competitive threat, vulnerable premium positioning, deteriorating comps/margins, and valuation vs. $7 target. We maintain belowconsensus estimates, with FY09 EPS at $0.59 vs. consensus $0.68."
To see more analyst ratings on SBUX Click Here.

Separate comments on McDonald's (NYSE: MCD) and McCafe, "Staying with a Hold on MCD, but 2H09 shaping up nicely...Maintain Hold on MCD as shares are currently trading within 10% of our $60 target (which embeds a P/E of 16x ‘09E). MCD also faces some near-term headwinds from currency and lingering commodity pressures. We prefer to look for a better entry point on shares, particularly as we get closer to 2H09 when commodity/currency compares ease and McCafe begins to hit its full potential. MCD EPS forecasts are unchanged at $3.75 for 2009 and $4.15 for 2010."
To see more analyst ratings on MCD Click Here. 
 
Starbucks Corporation (Starbucks) together with its subsidiaries purchases and roasts whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, complementary food items, a selection of premium teas, and coffee-related accessories and equipment, through Company-operated retail stores.

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