Deutsche downgrades Starbucks to Hold on reduced visibility

Deutsche Bank downgraded Starbucks to Hold from Buy with a price target of $89, down from $108, following the “challenging” fiscal Q2 report. Starbucks is facing broad-based headwinds with limited visibility into the pace of a recovery, the analyst tells investors in a research note. The firm says the quarter showed the company’s headwinds are more pervasive and persistent than expected. It has limited visibility into the pace and magnitude of a recovery. It is difficult to underwrite a meaningful reacceleration in U.S. same-store-sales, which is key to bull case, particularly in a “more challenging, value-seeking environment,” contends Deutsche Bank. The firm sees a balanced risk/reward for the shares given the reduced visibility into the timing of an inflection and earnings.