Starbucks "hold," target price reduced

11.06.07 - Deutsche Securities

NEW YORK, June 11 (newratings.com) - Analysts at Deutsche Bank Securities maintain their "hold" rating on Starbucks Corporation (SBUX). The target price has been reduced from $37 to $32.

In a research note published on June 8, the analysts mention that proprietary research as well as McDonald's focus on the high-margin premium coffee segment indicate that McDonald?s is the biggest competitive threat to Starbucks. The current valuation of Starbucks? stock suggests that the company?s EPS growth is of a lower quality than that of its peers, since EPS growth is driven by store expansion and not improved profitability, the analysts say.