Starbucks shares sink 6% after downgrade on concerns that sales initiatives are failing
Starbucks Corp. shares sank 6.7% in Wednesday trading after the coffee retailer was downgraded to neutral from buy at BTIG. "We believe the company's blizzard of sales initiatives are falling short of driving positive transactions and causing us to moderate our comp outlook," wrote analysts led by Peter Saleh. "We believe Starbucks is slowly transitioning from a global growth concept to a more mature company, as evidenced by the increased focus on G&A efficiency and cash returns, which we believe should warrant a lower valuation multiple." Starbucks announced on Tuesday that it is its lowering its fiscal 2018 earnings per share guidance by 10 cents to between $2.39 and $2.43. The company expects third-quarter same-store sales to rise 1%, missing the FactSet consensus for 1.5% growth. "Our previous view has been there was still enough to keep us positive but the persistent comp degradation causes us to finally give in," wrote BTIG. Starbucks shares are down 6.6% for the year so far while the S&P 500 index is up 3.7% for the period.
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