Piper Jaffray lowered its rating of Starbucks stock to "neutral" from "overweight" after the close Tuesday, citing a lack of confidence in the growth of its domestic same store sales.
"We believe the stock is range bound at best until U.S. trends improve," Piper Jaffray analyst Nicole Regan wrote in a note. "Our perspective is that there are issues around inconsistent results, credibility of guidance, and management transitions."
Shares of Starbucks fell 1 percent in premarket trading. With a lowered price target of $53 per share from $60 per share, Piper Jaffray's target is just shy of Tuesday's close of $54 per share.
While Regan says "many of the issues we have outlined are not new," the firm's "move to the sidelines" is due to the stock's lack of potential in "a reasonable timeframe." Piper Jaffray sees "substantial value in the opportunity for long-term store growth in China," Regan says, as well as the brand's ability to capitalize on premium options like "roastery and reserve bar locations .... on a global scale."
