Starbucks Shares Downgraded by Malaysian Bank Amid Covid-19 and Inflation

A Malaysian bank has issued a sell recommendation for Starbucks shares, citing the impact of the Covid-19 pandemic and the rising cost of living on consumer spending.

Bank Rakyat Malaysia (BRM) said in a note on Friday that it expects Starbucks to face lower demand and margins in the second half of 2023, as consumers cut back on discretionary spending and switch to cheaper alternatives.

The bank said that Starbucks’ growth prospects are also limited by its dependence on the US market, which accounts for more than half of its revenue, and its exposure to currency fluctuations and geopolitical risks.

“Starbucks’ valuation is also stretched at current levels, given its high valuation multiples compared to its peers and historical averages,” BRM said.

Keep Reading

The bank lowered its target price for Starbucks shares from RM 100 to RM 80, implying a downside of 18 per cent from the current price of RM 97.50.

BRM also advised investors to sell other consumer discretionary stocks, such as Unilever, Nestle, Procter & Gamble and Coca-Cola, as they face similar challenges from the pandemic and inflation.

The bank said that it expects consumer discretionary stocks to underperform the broader market in 2023, as they have lower earnings growth potential and higher sensitivity to economic downturns.

“Consumer discretionary stocks are also vulnerable to changing consumer preferences and behaviours, such as increased online shopping, health consciousness and environmental awareness,” BRM said.

Tags: Starbucks
Katherine S

1/4 German, 3/4 Malaysian. I write, follow and monitor closely political news happening in Malaysia, and other happening news in the ASEAN region. Newswriter for the best ASEAN news website - The Asian Affairs.

Recent Posts

V Surprises ARMY with Two Holiday Releases: A Festive Collab with Park Hyo-shin and “White Christmas” Cover

For K-pop fans, the Christmas season this year has become even more magical as several of their preferred stars reveal…

November 22, 2024

Celine Names TWS as Global Ambassadors Following Suzy Bae Announcement

After Suzy Bae's nomination as Celine's worldwide ambassador, the venerable French luxury fashion company has taken another bold step choosing…

November 22, 2024

Reddit Faces Widespread Outage, Users Turn to Workarounds Amid ‘Server Error’ Messages

Thousands of users of the well-known social network Reddit were left without access after a major outage of the website.…

November 22, 2024

Anne Hathaway Casted as ‘Verity’ in Colleen Hoover’s Book Adaptation

Anne Hathaway is slated to play the much expected film version of Colleen Hoover's best-selling book Verity in front of…

November 21, 2024

Gucci Set to Revolutionize Fashion Presentations with Unified Shows in 2025 under Sabato De Sarno’s Vision

Gucci is ready to change its presentation approach for 2025 in a radical action aimed to revolutionize the fashion industry.…

November 21, 2024

South Korea’s “Korea Discount”: Addressing the Governance Gap to Boost Market Value

As world investors wait for significant changes that might solve long-standing problems of governance and responsibility in South Korea's companies,…

November 21, 2024

This website uses cookies.

Read More