Starbucks slumps

ROMA LUCIW

Globe and Mail Update

Shares of Starbucks Corp., king of the skim-milk decaf — hold the chocolate sprinkles — latte, lost some of their froth Monday after UBS analyst David Palmer stirred in a dose of pessimism, cutting the stock to “neutral” from “buy.”

Seattle-based Starbucks stock fell 93 cents (U.S.) or 2.62 per cent to $34.57 in New York. It has rallied 41.5 per cent in the last year and 18 per cent in 2006, hitting a record high of $35.63 on Friday.

The stock's recent rise — which has sent its price-to-earnings ratio close to a five-year high — as well as the potential for slower same-store sales growth, were behind the UBS downgrade.

More...