Shares of Starbucks Corp. slumped 2.3% in active premarket trade Tuesday, after the coffee chain was downgraded at Deutsche Bank, which cited concerns about valuation and potential sales disruption from changes in its loyalty program. Analyst Brett Levy cut his rating to hold from buy, and his stock price target to $64, which is 5% above Monday’s closing price of $60.90, from $70. Levy said he believes “lofty near-term investors’ expectations” lead to a less favorable risk-vs.-reward investment outlook on the stock. “[Starbucks] results are likely to remain among best in class, but its shares could see limited upside in the coming quarters given challenging sales comparisons and given changes in the domestic loyalty program, which could slow traffic trends-as competitors view for new customers–in the coming quarters,” Levy wrote in a note to clients. The stock has soared 26% over the past year, while the S&P 500 has declined 2.9%.
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