Piper Jaffray Downgrades Starbucks (SBUX) to Neutral
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Piper Jaffray downgrades Starbucks (NASDAQ: SBUX) from Buy to Neutral and lowers their price target from $18 to $14. The downgrade us due to the company's "slower growth rate, lack of positive investment catalyst and lack of share price appreciation."
The firm said, "Our downgrade today signals that we are resigned to the fact that the Starbucks' turnaround is going to take longer than we previously anticipated. In addition, we believe the next data point (July 30 3Q08 CC) is likely neutral at best given the short-term impact of the indication for 600 company-owned store closures and resulting charges. While we credit management with further quantifying turnaround measures, we do not expect those strategies to have a meaningful impact in the short term. Longer-term, we continue to believe stores closures, G&A rationalization and capital deployment are critical initiatives as mentioned by our previously detailed scenario analysis."
Starbucks Corporation engages in the purchase, roasting, and sale of whole bean coffees worldwide.
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