Starbucks Gets Downgraded Despite 'Excellent' Quarter: Here's Why

Shares of Starbucks Corporation SBUX have risen by around 15% over the past month.

The Analyst: Deutsche Bank's Brian Mullan downgraded the rating for Starbucks from Buy to Hold, while raising the price target from $100 to $106.

The Thesis: The Seattle-based company reported “excellent” earnings results in early November, which highlighted the momentum in the U.S. business as well as the possibility that the adjusted earnings guidance for fiscal 2024 could prove to be conservative, Mullan said in the downgrade note.

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The stock has moved close to $105, “which is the reason for the ratings change at this point in time.”

Although there could be upside over the next 12 to 18 months, there is “the offsetting risk” of a potential U.S. recession, which could impact the domestic business, the analyst stated.

See Also: No Jitters Here - 5 Starbucks Analysts Say Coffee Giant Is Making Right Decisions

SBUX Price Action: Shares of Starbucks had declined by 1.18% to $103.81 at the time of writing Monday.