) to neutral from overweight.
Analyst John Ivankoe says results were in line. However, given the continued lackluster international business, matched with an eventual slowing of domestic comp-store sales, he thinks further near-term multiple expansion is unlikely. Ivankoe says in the second quarter, Starbucks acquired unprofitable Switzerland and Austria markets. Israel was closed, and Japan was very weak. He notes Great Britian still hasn't turned profitable after five years, and international licensed unit growth was reduced by 50 units to 325 units. SARS could also be an increasing issue in Starbuck's Asian markets.
Ivankoe cut the 71 cents fiscal 2003 (Sep) earnings per share estimate to 69 cents, and cut the 85 cents fiscal 2004 estimate to 83 cents.