UBS Downgrades Starbucks to ‘Neutral’ from ‘Buy’

Starbucks’s downgrade

Today, UBS downgraded Starbucks (SBUX) from “buy” to “neutral,” but raised its 12-month price target to $78 from $72. The new price target implies a rise of 4.0% from its stock price of $75.03 on April 5.

Although Starbucks’s SSSG momentum and the streamlining of its operations are positives that position the company in a better state going forward, UBS thinks the downside risk is more elevated, according to CNBC. The company’s stock price has increased by 55% from the lows of June 2018. UBS considers the increase in Starbucks’s stock price to reflect investors’ expectations, which are now elevated.

UBS Downgrades Starbucks to ‘Neutral’ from ‘Buy’

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Other analysts’ ratings

Among the total 29 analysts that cover Starbucks, 41.4% are favoring a “buy” rating, while 55.2% are recommending a “hold,” and 3.4% are recommending a “sell” recommendation. Analysts have given Starbucks a 12-month price target of $70.07, which implies a fall of 6.6% from its stock price of $75.03. Earlier, on March 27, Wedbush had raised its price target for Starbucks from $66 to $70.

Peer comparisons

Of the total 25 analysts that follow Dunkin’ Brands (DNKN), 20.0% have given it “buys,” while 76.0% are favoring “holds,” and 4.0% are favoring a “sell.” On average, analysts’ 12-month price target for DNKN stands at $71.67, which implies a fall of 4.7% from its stock price of $75.17.

Among the 29 analysts that follow McDonald’s (MCD), 79.3% have given it “buys,” while 20.7% have given it “holds.” Analysts have given McDonald’s a 12-month price target of $199.24, which implies a potential upside of 4.5% from its current price of $190.71.