Goldman Sachs Downgrades Tim Hortons (THI) to Sell; Suggests Swapping Into CAKE

Goldman Sachs downgraded Tim Hortons (NYSE: THI) from Neutral to Sell with a price target of $51.00 (from $57.00).

Analyst, Michael Kelter, said, "We now rate THI Sell within the context of our broader Restaurants coverage universe. While we appreciate the company’s ongoing unit expansion and sustained low-mid single SSS growth, we are concerned about recent declines in same restaurant traffic. These declines may be an early indicator of impending saturation in its home Canadian market and/or may reflect increased competitive pressures...We lower our 2012-2014 EPS estimates to C$2.72/C$3.06/C$3.34."

Suggests swapping into Cheesecake (Nasdaq: CAKE)...We see the most EPS upside potential from Chipotle Mexican (NYSE: CMG) and Dunkin' (Nasdaq: DNKN) and see risk around McDonald's (NYSE: MCD)

For an analyst ratings summary and ratings history on Tim Hortons click here. For more ratings news on Tim Hortons click here.

Shares of Tim Hortons closed at $52.89 yesterday.

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